You’re expecting a renewal letter from your insurance company and instead, you get a nonrenewal notice. What happened? Typically, a few months before your homeowners insurance policy expires, your insurance company will inform you in writing of your renewal offer or if you’ve been nonrenewed. We understand it can be an unpleasant experience to receive a nonrenewal notice but know that insurance companies don’t decide to non-renew without a cause. We’ll dive in on some of the reasons why insurers will non-renew a policy and how you can find new coverage after being dropped.
Insurance Cancellation vs. Nonrenewal
It’s important to understand that there is a big difference between an insurance company canceling your homeowners policy and choosing not to renew it. The most common reasons why an insurance company would cancel your policy are if you failed to pay the premium or if you have committed fraud or misrepresented yourself on the insurance application. In most states, insurers must give a policyholder written notice of cancellation at least 30 days before canceling the policy.
Nonrenewal on the other hand is where your insurance company chooses to not renew your policy due to various reasons we’ll explain. Just like you have the ability to not renew your policy once it expires, your insurance company can too, but with stricter stipulations. According to state laws, insurance providers are required to notify you in writing that they will no longer provide coverage. Depending on the state you live in, the notice must be provided to you a certain number of days before the policy expires and may need to include the reason for nonrenewal.
6 Reasons Why Your Homeowners Insurance Was Not Renewed
Although a nonrenewal by your insurance company is not common, it does occasionally happen. Some of the reasons why your insurer may not renew a homeowners insurance policy are:
1. Excessive claims filed
This is probably the most common reason for insurers to stop providing coverage for your home at renewal. If you filed too many claims in a year, your insurance company might find you too high-risk to insure. Additionally, insurance companies don’t like costly homeowners claims such as water damage, fire, or dog bite.
2. You now live in a risky location
Living in an area prone to wildfires, hurricanes, tornadoes, and extreme wind or hail is a major red flag for insurance companies. The probability of your home being damaged is higher than a homeowner who lives in a less hazard-prone location. Because of this, your insurance provider may decide to reduce the number of policyholders they take on in your area, hence, choosing to not renew your policy.
3. Insurance company discontinued coverage in your state
Insurance companies are businesses and they cannot operate sustainably at a loss. If cutting down or pulling out of a high-risk state like wildfire-prone California or hurricane-prone Louisiana, Texas, and Florida limits losses, that may be the action they’ll take and could be a reason why your homeowner policy is nonrenewed.
4. Owning certain dog breeds
Many dog owners are shocked to find that having a certain type of dog breed may impact your home insurance rate and make it more difficult to get insurance. Although most dogs are well-behaved, the reality is insurance companies view them as a liability risk. Dog bites are a major financial burden for insurers so they may refuse to provide coverage for dog-owning homeowners. Here are some of the dog breeds that are most often blacklisted by insurance companies:
If your insurer won’t cover your dog because of its breed, you might want to take a look at getting an umbrella insurance policy or dog-specific policy to protect yourself from liability claims.
5. Operating a business out of your home
Depending on your insurance company, your insurer could potentially not renew your policy if you’re using your home as a business. A standard homeowner insurance policy does not cover in-home business liabilities or business equipment. Businesses like running a daycare, massage practice, or at-home consultation are risks some insurance companies may not want to insure.
6. Didn’t pass renewal home inspection
Insurance companies may perform a random renewal inspection of your home. Upon inspection, if they find hazards accumulating on your property like untrimmed trees or broken windows, they may be reluctant to renew your policy. We recommend addressing these issues and completing the repairs as soon as possible to prevent a nonrenewal and to protect your loved ones from an accident occurring on your property.
How to Get Coverage After Receiving a Nonrenewal
There are a few steps you can take to find coverage after receiving a nonrenewal notice. Start by contacting your current insurance company to find out what went wrong with your policy. If the problem is not where the house is located, but the condition that it is in, ask them what type of improvements are needed to qualify your home for a renewal offer. They may provide you with suggestions on how to improve your home’s condition and give you a second chance. If the reason for the nonrenewal is where you live, talk to your neighbors and find out which insurers they use.
As a last resort, if your insurance provider won’t renew your policy and you are unable to find an insurance company to insure your home, contact your state’s insurance department. Many states have what is known as a Fair Access to Insurance Requirements (FAIR) plan, that can help homeowners considered high-risk find basic coverage. It’s important to note that coverage costs may be higher than a traditional policy and FAIR plans typically provide only basic fire protection and do not include liability or theft protection.
Shop Smart with AIS Insurance
The best way to compare coverage and rates is to use an insurance marketplace. Think of us as your trusted insurance guide. We’ll help provide coverage and rate comparisons from our premium homeowners insurance partners, like Mercury Insurance, Travelers, and Progressive. Speak with one of our Insurance Specialists today at (855) 919-4247 for a free quote.
The information in this article is obtained from various sources and offered for educational purposes only. Furthermore, it should not replace the advice of a qualified professional. The definitions, terms, and coverage in a given policy may be different than those suggested here. No warranty or appropriateness for a specific purpose is expressed or implied.