What Issues Can Make You Ineligible for Homeowner’s Insurance?
Homeowner’s insurance is a requirement if you finance your home, but did you know that you might not be automatically eligible for it? Just like any other insurance, you have to get approved by the agent. Insurance companies look at your likelihood of filing an insurance claim to determine if you are eligible for insurance. The insurance company bases this decision on your credit score and your history of making claims.
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Assuming you have perfect credit and have never made an insurance claim before, there are still ways an insurance company can turn you away. We take a look at the circumstances below.
Insurance Claims Can be the Nail in the Coffin
The largest reason people get turned down for homeowner’s insurance is their claim history. If an insurance company sees that you file an ‘excessive amount’ of insurance claims, they are unlikely to insure you. They want to insure homeowners that maintain their home and don’t file claims for various reasons. This doesn’t mean you can’t file claims on your homeowner’s insurance, but you should save the claims for ‘something big.’
Before you get excited because you’ve never filed a claim before, this also pertains to the home itself. If you are buying an existing home and the previous owners filed excessive claims, it could count against you. The insurance company looks at the risk of the house itself. If there were a lot of weather-related damages or thefts, the home could be considered too risky to insure.
Issues With the Home
Any time you apply for new homeowner’s insurance, an agent or inspector might come out to look at the home. This may occur before you apply or even after the company issues you insurance. They are looking specifically for any type of damage that could put them at risk for a claim. If there are extensive issues with the home that make it unlivable or that make it hazardous, the insurance company may deny your request for homeowner’s insurance.
Other issues insurance companies may not accept include:
- Damaged roofs
- Damaged windows or doors
- Poorly constructed additions
- Damaged foundations
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These are just a few examples of what insurance companies consider ‘uninsurable.’ Each company will have their own requirements and what they allow. Anything that could be a fire hazard or pose a risk to anyone living there or visiting could make it hard to secure insurance.
The Home’s Location
Sometimes a home’s location makes it hard for insurance companies to insure a home. If they do insure it, they may exclude certain issues, such as hurricane or wind damage, if the home is located in an area that is known for these weather conditions.
If the home is located in a crime-filled area, it could also prevent an insurance company from providing you with insurance. Again, they need to assess the risk of you filing a claim. If the area is fraught with crime, they are not going to want to insure you because the risk of a claim is very high.
The final issue that an insurance company could have with you is the animals you have in your home. If you have any ‘dangerous pets,’ it could leave you without homeowner’s insurance. Because dog bites are a serious claim that could cost insurance companies thousands of dollars, they often won’t insure homes with certain types of dogs in them. For example, homes with a pit bull as a pet may have a harder time securing insurance that homes that have a poodle.
If you are able to secure insurance despite your ‘dangerous pet,’ it may be a policy that excludes any liabilities resulting from the pet. Make sure you are honest with your insurance agent about the type of pets you have and inquire about the exclusions that may be involved with your policy.
Being ineligible for homeowner’s insurance can be frustrating. Make sure you do your homework ahead of time before you buy a home. At the very least, make sure you are careful about the claims that you make on any policy and ask the seller if he/she filed excessive claims on the home.
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