When Homeowner Insurance Canceled Due to Claims

What should you do if your homeowners insurance canceled due to your claims? It can be a daunting realization when you receive notice that your insurance is not going to be renewed. But, there are steps you can take to minimize potential financial damage.

First, it’s important to understand why a homeowners insurance non-renewal may happen. One example we can look to are the wildfires seen in California over the last several years. Along with the increase in wildfires, a higher number of homeowners in those affected areas are receiving non-renewal notices from insurance providers. This has also been reported as a trend in Florida and other states.

Sadly, this upward trend of homeowners insurance non-renewal in connection to natural disasters like wildfires can be tied to something called “changed carrier appetite.” Simply put, this means an insurance carrier no longer wants to cover the homeowners because they’ve decided their risk exposure is too high due to claim volume or anticipated risk. And so, homeowners are left to wonder how they can protect their homes.

Homeowners insurance companies are wary of homeowners who have filed claims, even if it was just one claim. They believe that if you have filed a claim with them you will end up filing more claims in the future. Looking at statistics, there is more of a chance of you filing another claim than not.

It is actually a rare occurrence that homeowners use homeowners insurance. Some studies have suggested that the average homeowner will file one insurance claim every seven years, and premiums are usually used to pay for damage if need be. Despite this, insurance claims are a red flag for insurance companies, and they will not hesitate to let you go.

Another likely reason for cancellation is due to a claim being made pertaining to a incident that could happen again. Down the road, you may make the same type of claim, and it could grow into something more substantial. Your insurance company will carefully assess the circumstance of your claim. Water damage is one of the fastest growing types of claims and after a water claim the insurance company may determine that the home has a systemic plumbing issue and non-renew the policy. Are there issues that caused the initial incident that could pop up again? They will quickly note them and may send you on your way to find another insurance provider.

It will be extremely difficult to move on to a different insurance company once yours cancels your policy. Other insurance companies will be able to see your claims history, and this could hurt your bank account as you may have a higher rate if a homeowners insurance company does take you on. Convincing your insurance company to reinstate your policy is the best option you have. Even if you want to switch insurance companies, you should consider trying to get your policy reinstated. After five years, you will clear your claim history, and then you can start searching for other insurance companies.

You will need to find out exactly why your insurance was canceled so you can correct the reason. If you had several claims over a short span of time, let your insurance company know you were unaware that this would result in the cancellation of your insurance. You will also need to prove that you will not make minor claims in the future, possibly by having a larger deductible.

You may need to take preventative measures against future incidents that you previously made a claim about. If you or someone in your home had a lapse in fire safety and a fire occurred, you could possibly show that you are making the effort to correct it by taking a fire safety course.

Ultimately, look to your insurance agent for help. They should be assisting you through this process and letting you know what steps to take to have your policy reinstated.