Non-renewed homeowner’s insurance can be scary. Can your insurance company do that to you? Can they just decide that they don’t want to renew your policy? It does happen and for a variety of reasons. Lately, with the natural disasters happening across the country, many insurance carriers are pulling back on their policies for fear of being put out of business.
What happens if you are the unlucky recipient of a non-renewal? Keep reading to find out.
What is a Non-Renewal?
As we discussed above, a non-renewal is basically the insurance company changing its mind. They have the right to do this, but they are required to give you notice. Each state has different laws regarding how much time an insurance company must give you. In some states, though, it’s as long as 60 days. This gives you enough time to shop around and find a policy elsewhere.
Reasons for a Non-Renewal
Insurance companies non-renew policies for a variety of reasons, but the most common include:
- The company doesn’t offer the program you were paying for previously. Insurance companies do change their coverage options from time to time, which means you either have to choose a different policy or go elsewhere.
- The insurance company may have lost licensing in your state. If this happens, they can’t renew any insurance policies in your state.
- Your risk factors changed and they don’t fit within the insurance company’s guidelines. If you remember when you applied for the insurance, you had to go through an underwiring process. If your factors have changed since then, the insurance company may decide that you are too high risk and they may pull back on providing you with a policy.
What to do if you Have a Non-Renewal
If you are the recipient of a non-renewal, you have a few options. Obviously, you have the right to look elsewhere for insurance. You always have that option. You aren’t tied to the insurance company for any reason. If they tell you they are not renewing your policy, it forces you to look elsewhere.
You do have the right to ‘fight’ the non-renewal too. If you think the insurance company is in the wrong, you can contest it. There’s no guarantee that you’ll win, but it may be worth a try. The most common reasons homeowners fight the non-renewal include:
- They think the insurance company is mistaken about the risk factors. Whether it’s a weather-related issue, wildfire risk, or something happened that made your home a high risk of claims, you can contest it. You’ll need proof of why you think the insurance company is wrong, though, which could require a lot of legwork on your part.
- They fixed the issue. If the insurance company had a specific issue with your home or the factors that put it at risk, you can try to minimize the issues and provide the insurance company with proof.
- In either case, the insurance company is under no obligation to renew your policy, but they might if you provide enough proof. If they don’t, it’s important to start shopping for insurance elsewhere right away.
Is a Non-Renewal the Same as a Cancellation?
A non-renewal and a cancellation are two different things. The non-renewal means the insurance company decided to cancel your policy. A cancelation is typically due to something you did (or didn’t do).
The most common reason for insurance cancelation is lack of payment. If you miss your due date and grace period, the insurance company will likely cancel your policy. For example, if your insurance payment was due December 1st and you have a 10 day grace period, but you don’t make your payment after December 10th, the insurance company could cancel your policy as of December 11th. Each insurance company has different guidelines, but most will cancel for non-payment rather quickly.
The other reason insurance companies typically cancel insurance is due to fraud. If you misrepresent yourself, your home, or you file a false claim, you will likely have your insurance canceled on the spot.
Homeowner’s insurance is required if you have a mortgage and it’s the only way to protect yourself financially should something major happen to your home. If you receive a non-renewal notice, take action right away. Whether you fight it or shop around for a new policy, doing something immediately is the only way to protect your home and your finances.Get the right insurance coverage.