- What to do if your homeowners insurance is canceled
- Can homeowners insurance drop you?
- Reasons home insurance companies can drop you
- When can your homeowners insurance company cancel your policy?
- What happens if my homeowners insurance is canceled?
- What happens to your mortgage if your homeowners insurance is canceled?
- Home insurance nonrenewal vs. cancellation
- Home insurance cancellation rights
- Home insurance cancellation laws by state
- How to get homeowners insurance after being dropped
- Is it hard to get homeowners insurance after being dropped?
- How to get homeowners insurance after a lapse in coverage
- How to avoid homeowners insurance cancellation
- Source:
- FAQ
What to do if your homeowners insurance is canceled
If you receive a notice that your home insurance is being canceled or nonrenewed, there are a few steps to take:
- Call your insurance company. Speak to a representative or agent and find out if there is anything you can do to reverse the cancellation. If a payment is late, you may be able to stop the cancellation simply by getting your payments caught up.
- Start getting insurance quotes. Even if you might be able to resolve the problem with your current insurer, get some new options lined up just in case. You might even save money.
- Complete any repairs. If needed repairs are causing issues with insurance, get them taken care of. You might be able to stop the cancellation, but even if you can't, most other insurance companies will also require that repairs be completed.
- Get help. Contact your state’s insurance department if you think you’re being treated unfairly or illegally by your insurance company. It can also help you if you can’t find new coverage for your home.
Insurance companies are required to notify homeowners in advance when a policy is being canceled. Laws regarding cancellation and nonrenewal notices vary by state.
In California, for example, the insurer must send a nonrenewal notice at least 45 days before cancellation. In many cases, if an insurance company fails to inform you in writing, your policy will remain in place until 45 days after the notice is sent.
Depending on why the insurance provider canceled the home insurance policy, you may be able to reinstate your policy. If not, you'll need to find a new insurer.
If the insurer canceled your coverage because of an unacceptable risk on your property, repairing the issue could result in your policy being reinstated. If your insurer still refuses to insure you, you can dispute the cancellation and request remediation or file a complaint with the state department that oversees the local insurance industry.
However, if the insurer canceled your home insurance because you filed too many insurance claims or gave false information on your application, it's unlikely that your policy will be reinstated. You may also have difficulty finding another provider.
PEOPLE ASK
My home insurance was canceled after two claims. What can I do?
Start shopping around, but in the meantime, find out why your policy was canceled. In most cases, two claims isn't grounds for cancellation, so there may be other factors at play. Contact your insurance company to find out.
If your policy is canceled for nonpayment, call the insurer and see if getting caught up on payments will quickly restore coverage.
If your insurer canceled your coverage, call the insurer and ask it to reconsider. If it won’t, shop for a new policy. If you cannot find one, look to coverage from your state’s Fair Access to Insurance Requirements (FAIR) plan.
Can homeowners insurance drop you?
Yes, an insurance company can drop your policy in specific circumstances, although the word "drop" implies that it's sudden. However, this is not the case. The company is required to give notice of home insurance cancellation with time to find a new policy.
Home insurance is a contract, and if you violate that contract, your home insurance company can cancel your policy. Additionally, if your home becomes too much of a risk for the company, it can choose to nonrenew the policy — which means that when the policy term ends, the company will not renew it.
In some cases, it's not just you. Insurance companies may cancel homeowners insurance policies in a certain area, withdraw from a state altogether or even go out of business. While events like these are not the homeowner's fault, they still leave people searching for new home insurance. The current home insurance crisis is affecting some places more than others.
Florida's volatile home insurance market is a good example, as is the recent news of home insurers stopping sales in California.
It's important to note that the contract goes both ways. An insurer has to have an acceptable reason to cancel your coverage. State laws outline the situations in which a home insurance company can cancel or nonrenew a policy.
Reasons home insurance companies can drop you
Homeowners insurance cancellation reasons may vary, but the bottom line is the same in all cases: An insurance company can cancel your home insurance policy (or nonrenew it) only for specific reasons spelled out in state law. Those reasons are also listed in your policy.
The most common of homeowners insurance cancellation reasons is that something about your property has become too risky, or the company has discovered a risk it wasn't aware of when the policy was issued. Home insurance canceled for underwriting reasons would fall under this category.
Risks for policy cancellation include:
- A problem was found during an inspection. An insurer may cancel an existing policy on renewal if the insurance company's underwriter inspects the property and finds an unacceptable risk.
- Roof issues. Your homeowners insurance may be canceled because of your roof.If you have an older roof, your insurance company may decide it's too risky.
- Multiple claims. Generally, your home insurance can't be canceled after one claim, but it can be nonrenewed after filing too many insurance claims.
- Living in a high-risk area. An insurer may also elect not to insure any properties in an area prone to natural disasters. "Insurance companies would normally not react to one bad year," says Keith Balsiger, president of Balsiger Insurance in Nevada. "They do modeling and look at profitability over a period of time. It's not uncommon to have a year where the insurance company loses money."
- Pets. Many insurance companies have an exclusion list for pets. This list can include everything from exotic pets like boa constrictors to certain dog breeds.
- Not paying your premiums. If you fall behind on payments, your insurance company will cancel your policy.
- Bad credit. If your credit has taken a dive since your policy was issued, it might raise red flags on renewal. "Credit along with a poor claims history might be used together to determine if an insurance company will provide coverage for you," Balsiger says. "In most cases, you will be offered coverage -- the question is will it be affordable?"
CASE STUDY: A dying tree loses a large branch that fell on the roof, resulting in a home insurance claim. The claim is paid, and the roof is repaired, but the homeowner doesn't remove the tree, which continues to deteriorate. The same tree falls on the home during a major storm a year later. Although the claim is covered by the insurance company, the homeowner receives a nonrenewal notice shortly after the claim is closed.
The homeowner in this case was negligent in not removing a tree that had already caused a claim. Not only is the homeowner in violation of the insurance contract requiring them to keep the property in good repair, they are now considered a high risk for a future claim, leading the company to drop the policy.
When can your homeowners insurance company cancel your policy?
Your insurer can cancel your homeowners insurance policy, but only under certain circumstances.
For example, if you miss your payments or commit a form of fraud, your policy might be subject to cancellation. In addition, if the insurer discovers that you misrepresented something on your application, this might also be grounds for cancellation.
In other circumstances, the insurer might have the right to decide not to renew your policy when it expires. This can happen if you have filed too many claims, or if an inspection or other information reveals that something has changed that significantly increased the risk to your property.
PEOPLE ASK
Can my homeowners insurance be cancelled after submitting a claim?
No. Your home insurance company can't cancel your policy just because you submitted a claim. However, if the investigation of the claim turns up something that violates the insurance contract, your insurer can cancel the policy on those grounds.
Other potential sources of nonrenewal might include a change in your credit score or indications that you have not properly maintained or repaired the home.
Finally, some insurers are now exiting markets that they deem too risky, such as California or Florida. This could be another reason that an insurer would decide not to continue to insure your home.
What happens if my homeowners insurance is canceled?
If your homeowners insurance is canceled, here are a few different things that could occur.
- Your homeowners insurance rate might increase. If your insurance company drops your insurance due to non-payment of premiums, you will have to deal with increased insurance rates with another insurer.
- You could find it challenging to get insurance in the future. Some insurance carriers consider you high risk if there is a gap or lapse on your insurance record, and they might refuse to provide insurance coverage.
- Your mortgage company may purchase lender-placed insurance on your home. Lender-placed insurance, also called force-placed insurance, is an option of last resort, says Gina Clausen Lozier, partner at Berger Singerman Law Firm. This is a policy that protects only the mortgage company’s interests.
“The issue with lender-placed insurance is that it protects the mortgage company, but not the homeowner," Clausen Lozier says. ”Typically, it's more expensive and doesn't provide coverage for personal property and contents and doesn't cover additional living expenses if you have a loss and have to leave your home."
What happens to your mortgage if your homeowners insurance is canceled?
If your homeowners insurance is canceled, you must replace the policy with new coverage right away. Not only does homeowners insurance protect your property, but if you have a mortgage, your lender will insist you maintain coverage.
If you fail to purchase replacement homeowners insurance coverage, your insurance company has the right to purchase its own policy on the property and charge you for it. This is known as “forced-placed” or “lender-placed” insurance.
The cost of such coverage is often much higher – sometimes twice as high -- than what you would pay for purchasing your own policy, according to the Consumer Financial Protection Bureau. So, it is much better to immediately purchase new coverage if your policy is canceled.
Home insurance nonrenewal vs. cancellation
There are two types of home insurance termination: nonrenewal and mid-term cancellation. The difference between nonrenewal and cancellation is when the cancellation occurs, as both involve the insurance company canceling your policy. There are also more possible reasons for nonrenewal than for cancellation. Here's a look at the difference between home insurance nonrenewal and cancellation.
Nonrenewal of homeowners insurance
Nonrenewal is when the insurance company decides not to renew your policy at the end of the term. Essentially, it is canceling your policy effective on the last day of the current policy term or, more accurately, simply not renewing it. Most cancellations are actually nonrenewals.
Cancellation of homeowners insurance
Cancellation is effective in the middle of the policy term. There are only a few instances when an insurance company can drop you mid-term. They usually involve things like insurance fraud or non-payment of premiums. Even in an “immediate” cancellation, the insurance company is required by law to give you notice.
| When it happens | Possible reasons* | Average notice* | |
|---|---|---|---|
| Nonrenewal | On your policy's renewal date | -increase in risk in your area -increase in risk on your property -changes in your home's eligibility -multiple claims | 30-60 days |
| Cancellation | Mid-term | -non-payment -fraud -material misrepresentation | 10-30 days |
*varies by state
Home insurance cancellation rights
There are laws in place to protect homeowners from unfair practices on the part of insurance companies. The laws vary by state, but in general your rights should include:
- Notice of cancellation or nonrenewal within the state's required time period. In general, this ranges from 30-45 days, although for nonpayment it may be much shorter.
- Home insurance can only be canceled or nonrenewed for a specific set of reasons, with cancellation having the strictest rules.
- Notice in writing with the reason for the cancellation.
Home insurance cancellation laws by state
Homeowners insurance cancellation laws are determined by the state in which you live. For example, the reasons that allow an insurer to cancel your policy can vary from state to state.
An insurer typically must notify you in advance when it is going to cancel your policy. However, each state has its own rules for how many days of notice it must provide before canceling the policy.
Some states also require the insurer to explain why it is canceling the policy. Here's a look at the home insurance cancellation laws in each state.
| State | Notice required* |
|---|---|
| Alabama | At least 30 days for nonrenewal, 20 days for cancellation, 10 if for nonpayment |
| Alaska | At least 30 days, 20 if for nonpayment |
| Arizona | 30 days for nonrenewal, 5 days for cancellation |
| Arkansas | At least 20 days, 10 if for nonpayment |
| California | At least 20 days, 10 days for nonpayment or fraud |
| Colorado | At least 60 days, 10 if for nonpayment |
| Connecticut | At least 30 days, 10 if for nonpayment |
| Delaware | At least 30 days, 10 if for nonpayment |
| Florida | At least 20 days, 10 if for nonpayment |
| Georgia | At least 30 days, 10 if for nonpayment |
| Hawaii | 30 days for nonrenewal, 10 days for cancellation |
| Idaho | At least 30 days, 10 if for nonpayment |
| Illinois | At least 30 days, 10 if for nonpayment |
| Indiana | At least 20 days, 10 days for nonpayment or fraud |
| Iowa | At least 30 days, 10 if for nonpayment |
| Kansas | At least 30 days, 10 if for nonpayment |
| Kentucky | At least 75 days, 14 days if for nonpayment |
| Louisiana | At least 60 days, 10 days if for nonpayment |
| Maine | 30 days for nonrenewal, 10 days for cancellation |
| Maryland | Ar least 45 days,10 days for nonpayment |
| Massachusetts | At least 45 days for nonrenewal, 5 days for cancellation, 10 if for nonpayment |
| Michigan | At least 30 days |
| Minnesota | At least 60 days, 10 if for nonpayment |
| Mississippi | At least 30 days, 10 if for nonpayment |
| Missouri | At least 30 days, 10 if for nonpayment |
| Montana | At least 45 days, 20 if for nonpayment |
| Nebraska | At least 60 days, 10 days if for nonpayment |
| Nevada | At least 30 days, 10 if for nonpayment |
| New Hampshire | At least 60 days, 10 days if for nonpayment |
| New Jersey | At least 30 days, 10 if for nonpayment |
| New Mexico | 30 days for nonrenewal, 15 days for cancellation |
| New York | 45-60 days for nonrenewal, 15 days for cancellation** |
| North Carolina | At least 45 days for nonrenewal, 15 for cancellation |
| North Dakota | At least 45 days for nonrenewal, 30 days for cancellation, 10 if for nonpayment |
| Ohio | 30 days unless for nonpayment, fraud, misrepresentation or if there is evidence of arson |
| Oklahoma | At least 30 days for nonrenewal, 10 for cancellation |
| Oregon | At least 30 days,10 if for nonpayment |
| Pennsylvania | 30 days for nonrenewal, 15 days for cancellation |
| Rhode Island | At least 30 days, 10 if for nonpayment |
| South Carolina | 60 days for nonrenewal, 30 days for cancellation, 10 if for nonpayment |
| South Dakota | At least 60 days for nonrenewal, 20 for cancellation |
| Tennessee | At least 30 days for nonrenewal, 20 for cancellation, 10 if for nonpayment |
| Texas | 30-60 days for nonrenewal***, 10 days for cancellation |
| Utah | At least 30 days, 10 if for nonpayment |
| Vermont | At least 45 days, 15 if for nonpayment |
| Virginia | At least 30 days, 10 if for nonpayment |
| Washington | At least 45 days, 10 if for nonpayment |
| West Virginia | At least 30 days, 10 if for nonpayment |
| Wisconsin | At least 60 days for nonrenewal, 10 days for cancellation |
| Wyoming | At least 45 days, 10 if for nonpayment |
| Washington D.C. | At least 30 days, 15 if for nonpayment |
Source: State insurance codes
*In most cases, this applies to policies in force for at least 60 days, longer in some states
**In New York, policies can't be nonrenewed or canceled until they have been in force for three years, with specific exceptions
***Policies bought in 2024 or later, 60 days, 2023 or earlier, 30 days
How to get homeowners insurance after being dropped
As soon as you know your insurance policy is being canceled, start talking to other insurance companies. An independent agent or broker can be helpful since they know multiple insurance providers and which accept houses that have been previously dropped.
If the property needs repairs that you can't afford to complete right now, you may need to look for non-standard coverage (coverage from a company that specializes in high-risk insurance).
"Most insurance companies underwrite or review the eligibility of a property upfront. Existing damage, depending on how bad and what kind, could make a property ineligible for coverage with the 'normal' home insurance companies," says Balsiger. Balsiger suggests looking for state assistance.
If you have difficulty getting insurance, call your state's Department of Insurance and ask for information about the FAIR plan. The downside is that you'll probably pay higher premiums, but that's better than being uninsured.
FAIR Plans, or Fair Access to Insurance Requirements Plans, are also options for high-risk homeowners. A FAIR plan allows high-risk homeowners to get coverage, but they often come with higher premiums and inflexible terms and conditions. Most states offer a last-resort option for insurance, such as a FAIR plan or a state-run insurer like Florida's Citizens Insurance.
Is it hard to get homeowners insurance after being dropped?
In most cases, yes. Finding a new homeowners insurance policy can be challenging if your home insurance has been canceled. Insurance companies consider a person's claims and coverage history when deciding whether they qualify for coverage.
How to get homeowners insurance after a lapse in coverage
If you have had a lapse in your homeowners coverage, you will likely find it harder to get a new policy, but you can find coverage by shopping around with multiple companies. Because a lapse in coverage increases risk and therefore rates, it's best to avoid it whenever possible. If your policy is being canceled, shop for new coverage immediately, before it lapses. Our list of the Best Home Insurance Companies is a great place to start.
How to avoid homeowners insurance cancellation
To reduce your risk of a home insurance cancellation, make sure you've addressed anything an insurer might deem an unacceptable risk. Keeping up with routine maintenance on your home can also help you avoid big-ticket repairs when it's time to renew your policy.
Don't file small claims. If the claim is not too much over the deductible, it might not be worth filing.
The Berger Singerman Law Firm’s Clausen Lozier advises homeowners to ensure their insurance company inspects their homes before writing a new policy. She says to videotape and photograph the property so you have a record of what the property looked like at the time the insurance company insured it.
Source:
Consumer Financial Protection Bureau. "Consumer advisory: Take action when home insurance is canceled or costs surge." Accessed September 2024.
FAQ
How long does canceled insurance stay on my record?
Insurance companies report claims and cancellations to the Comprehensive Loss Underwriting Exchange (CLUE) database. The CLUE records typically last five to seven years.
What happens if you have a lapse in homeowners insurance?
Lapses occur when your current policy runs out, and you don’t have new coverage. This concerns insurance companies because it makes the home more of a risk. It’s best to get new coverage before your old policy cancels, but if you do have a lapse, it might mean higher premiums and difficulty finding a new policy.
How many claims can you make before a home insurance company drops you?
There's no set number of claims that can trigger a policy cancellation. It usually depends on the severity of claims and the number of claims you have filed during a specific period. It also depends on the type of claims, since an insurer generally can't cancel your policy for multiple weather-related claims.
Can a homeowners insurance company drop you after a claim?
In general, as long as you have been a good customer and haven't made many claims in the past, your homeowners insurance company will not drop you after one claim. It’s illegal to cancel your insurance policy just because you filed a claim.
However, if the company discovers something during the investigation of the claim that is a reason for cancellation, such as negligence on your part that led to the damage, your policy can be canceled.
Can my homeowners insurance get canceled for underwriting reasons?
Yes. Underwriting is the process by which an insurance company evaluates risk and determines eligibility and rates. Most nonrenewals are for underwriting reasons.
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