What to do if your homeowners insurance is canceled

Home insurance exists to protect you from potentially catastrophic costs in the event of a disaster such as a fire, burglary or wind storm. If your homeowners insurance is canceled or nonrenewed, you could be at risk financially. In this guide, Bankrate’s insurance editorial team takes a deep dive into why and when a carrier might choose to cancel or nonrenew your policy, and what home insurance cancellation rights you may have if it happens.

Types of homeowners insurance terminations

There are different types of homeowners insurance terminations. Some have easy solutions, while others might mean you need to find a new insurance company to avoid a lapse in coverage. These types of cancellations apply to condo and renters insurance, as well. Three of the most common reasons your homeowners insurance coverage gets disrupted are:

Lapses in home insurance payments

Failure to make payments toward your premium can result in homeowners insurance cancellation. But, a home insurance lapse may be the simplest type of issue to fix. Most homeowners insurance companies offer a grace period in which you can make a payment to reinstate your coverage. Paying your overdue bill right away is the fastest way to resolve a lapse in coverage issue, as long as you are still within the grace period.

If your mortgage company pays your insurance from an escrow account, you may need to call your mortgage lender to understand why it did not send a payment. It could be that your lender did not receive a bill if your mortgagee clause listed on your homeowners insurance policy was incorrect or outdated.

Nonrenewal of home insurance coverage

Nonrenewals can be initiated by you or your carrier. Your insurance company may decide to nonrenew your policy for several reasons, including a change in your claims history or the condition of your home. If you no longer fit into the company’s underwriting profile for any number of reasons, your policy may be nonrenewed.

In other cases, your insurance carrier may no longer operate in your area or might withdraw coverage after a series of costly claims in your community or state. Regardless of the reason, state regulations require insurance companies to notify you in writing if they decide to nonrenew your homeowners insurance at the end of your current policy term and explain the reason.

When issuing a nonrenewal, insurers are required to provide you with advance written notice ranging from 30 to 120 days (regulations vary by state) to allow you enough time to shop around and find alternative coverage. According to the Insurance Information Institute (Triple-I), you may not necessarily be charged a higher premium when switching to another carrier because of a nonrenewal, depending on the circumstances that led to your insurer’s decision.

You might also decide to initiate a nonrenewal if you have gotten quotes from other companies and decide to switch insurance carriers at your renewal date. In this case, you would need to let your previous insurance company know to nonrenew your policy so that you do not end up with two policies in force when switching providers.

Cancellation of home insurance coverage

As with nonrenewals, either you or your insurance company may initiate a cancellation. Cancellations differ from nonrenewals in that the last day of coverage does not necessarily coincide with your policy’s renewal date. For example, if your homeowners insurance policy starts and ends on January 1 every year, a nonrenewal notice will not become effective until the end of your current policy term. A cancellation notice can stop coverage anywhere within the policy term with advance notice required by your state’s insurance regulations.

Insurance companies may choose to cancel your home insurance policy for a number of reasons. If you misrepresented yourself or omitted information during the application process, for example, your homeowners insurance may be canceled, even if you have only recently purchased your home and policy.

One of the most common reasons that insurance companies cancel home insurance policies is related to inspections. Insurance companies generally do exterior inspections of homes when new policies are written, and on occasion after that. For example, if your roof is in poor condition, your home has structural issues or your company discovers that you own an ineligible dog breed, you may receive a cancellation notice requiring you to correct the issues or risk your policy being canceled altogether. Other reasons for mid-term cancellations include:

• Insured party committed claim fraud.
• Insurer decides to reduce its risk due to financial condition and is granted permission by the state’s department of insurance to cancel policies mid-term.
• Company is declared insolvent. In this case, the policy will typically terminate 30 days after a liquidation order is granted by the court.

Insurance companies are required by state laws to send you a written notice of cancellation, usually within 30 days, but some states require 60 days. This gives you time to discuss the cancellation with your carrier, and correct any concerns so that the company will continue coverage or you can find a new home insurance company.

A policyholder can also initiate a home insurance cancellation. Perhaps you found a cheaper company or you have sold your home. You can call your agent or carrier to request that your policy be canceled on a specific date. You may need to sign a cancellation form to confirm your request. You may also be entitled to a prorated premium refund if you paid in advance for the entire policy term.

Learn more: How to switch home insurance companies

What to do if your homeowners insurance is canceled

Depending on the type of notice you receive, you may either need to take steps to remedy the problem or find new coverage. Here is an overview on what to do for each type of notice:

• A notice of lapse in coverage: If you receive a homeowners insurance policy lapse letter, contact your insurance carrier or agent right away and make any past-due payments. Once you have reinstated your policy, you may also need to notify your lender to avoid a “force-placed” policy.
• A notice of non-payment: If your homeowner’s insurance is paid through your escrow account and you receive a notice of non-payment, it is important to contact your lender right away. There may be a simple clerical error or there could be a larger issue that you need to remedy directly with your lender.
• A notice of nonrenewal: If you receive a nonrenewal notice, your first step is to find out why your policy is being terminated. The letter you receive may include an explanation, or you could call your carrier or agent to get more information. Depending on the situation, you may be able to make changes to your home or policy that will satisfy the insurance company and allow you to keep your coverage.
• A notice of cancellation: If you receive a cancellation notice, talking to your insurance company or agent is a good first step. If your homeowners insurance was canceled after an inspection, you might be able to make the necessary changes to your home, like repairing or replacing a deteriorated roof. This could be enough for the company to rescind the cancellation and maintain your coverage. Sometimes insurers will provide a timeframe for making repairs before cancellation.

If you are not able to remedy the issue or convince your insurance company to keep your policy, you’ll need to find insurance elsewhere.

What will my mortgage company do if my home insurance is canceled?

If you have a mortgage on your home, it is important to let your lender know if your policy has been canceled or nonrenewed. If you do not immediately purchase new coverage, your lender may initiate a “force-placed” policy on your property. This is a policy purchased by your mortgage company that you are required to pay for.

Force-placed insurance does not favor the homeowner. A force-placed policy is typically much more expensive than purchasing a policy on your own and may not offer the same level of coverage as your previous policy. It generally won’t cover your personal property and may leave you exposed to liability claims as well.

Can I contest a home insurance cancellation?

You may be able to contest a cancellation or nonrenewal, depending on the situation. If you have an agent, they may be able to work directly with your insurer’s underwriter to come to a compromise, or you could call your company directly. If you have filed numerous claims, for example, you may be asked to increase your deductible or remove a certain coverage in exchange for the company keeping your policy. However, it may be a good idea to get quotes from other home insurers as a backup so that you are not left scrambling to find coverage quickly if your negotiations fail.

Can I still get home insurance after being dropped from my insurer?

Unfortunately, it may be harder — but not impossible — to find coverage after a cancellation or nonrenewal, especially if you have numerous claims or your home is in poor condition. If you are having trouble finding affordable home insurance after a cancellation, it may benefit you to check around for providers offering coverage for high-risk homeowners in your area. Or, if your home insurance policy was canceled after an insurance inspection, quickly addressing the issue (like fixing up an older roof) may help get you back into your insurer’s good graces. If your policy cancellation was due to an act of insurance fraud, you may have an extremely difficult time finding replacement coverage.

Frequently asked questions

• Why is my homeowners insurance being canceled?

  There are many reasons why your home insurance could be canceled or nonrenewed. Your insurer is required to provide you with a cancellation or nonrenewal notice containing an explanation for their action and giving you a specified amount of time before your coverage ends. Your coverage may have lapsed for nonpayment of premium, your insurance company may decide not to renew your policy due to claims you have made or significant issues may have been discovered during the insurer’s inspection of your home, among other reasons.

• How do I cancel a home insurance policy?

  To cancel a home insurance policy, you will first need to contact your current provider. If you have a mortgage on your home, you will also need to contact your lender. It’s highly likely that they require you to carry home insurance and they will need to be notified if you want to switch providers. After you notify your insurer, you may also need to sign a cancellation form.

• What home improvements could make it more likely for my insurer to renew my policy?

  Home improvements that enhance the safety, security and condition of your home are more likely to positively influence your insurer’s decision to renew your policy. Examples include installing a new roof, upgrading electrical and plumbing systems, reinforcing windows and doors against storms, adding a security system or implementing measures to protect against fire and water damage. These improvements not only reduce the risk of claims but can also help to avoid some of the common scenarios resulting in nonrenewal of home insurance.

• How does getting a new pet affect my home insurance?

  Getting a new pet could impact your home insurance in a few ways. While most standard home insurance policies cover liability for pet-related incidents, certain breeds of dogs or other exotic animals may be excluded or require additional coverage due to a perceived higher risk. Additionally, pets can cause damage to your property, which may affect your coverage or premiums. It’s essential to inform your insurance provider about any new pets to make sure that you have adequate coverage, understand any potential changes to your policy terms and avoid unexpected home insurance cancellation.

• What are some common reasons for nonrenewal of home insurance?

  Common reasons for nonrenewal of home insurance include a history of frequent claims, failure to maintain the property, living in a high-risk area prone to natural disasters, changes in underwriting guidelines or risk assessment by the insurance company and failure to pay premiums on time. Additionally, if the insurer decides to carry out a home insurance cancellation in a particular region or decides to exit the home insurance market altogether, they may choose not to renew policies in that area. It is crucial for homeowners to stay informed about their policy terms and maintain their property to minimize the risk of having home insurance canceled or nonrenewed.