What to Do if You’re Dropped by Your Home Insurance

Reasons Why Your Home Insurance Policy Can be Canceled

Although they both leave you without insurance, nonrenewal and cancellation of homeowners insurance are two different things.

• Nonrenewal means your insurer opts not to renew your policy at the end of the term.
• Cancellation means your insurer terminates your policy before it expires.

Why Your Home Insurance Might Not Be Renewed

Insurers generally have the right not to renew your home insurance. Laws vary by state, but if your insurer plans not to renew your policy, they typically must give you 30 days notice so you can find alternative coverage.

Nonrenewal may happen for reasons outside your control; for example, your insurance carrier may decide your location has become too risky or stop writing policies in your state. If you file multiple claims within a seven-year period, your insurer may deem your home high-risk and opt not to renew your policy.

Tip: If you've owned your home for less than seven years, you can order your home's Comprehensive Loss Underwriting Exchange (C.L.U.E.) report from LexisNexis to see if previous homeowners filed any claims in that period.

Why Your Home Insurance Might Be Canceled

Within the first 60 days of purchasing a homeowners insurance policy, insurers may be able to cancel it for any reason, although some states require specific grounds for canceling, such as a failing a home inspection.

Once your homeowners policy has been in force for 60 days, your insurer can only cancel your coverage if:

• You didn't pay your premiums on time.
• You got your insurance through fraud.
• There's a decline in the condition of your home or property that substantially increases the insurer's risk.
• You're convicted of a crime that increases the insurer's risk.
• Your insurance carrier becomes insolvent.

Learn more: How to Get Insurance in a Fire Zone

Home Insurance Cancellation Laws by State

Your home insurance carrier is required by law to give you notice when they plan to cancel your policy. When they must notify you varies by state. Your state's department of insurance can provide information about the laws in your state. You can also contact your state's insurance department if you believe your home insurance was canceled unfairly.

Department of Insurance Contact Information for Each State

What to Do if You're Dropped by Your Home Insurance

If you're dropped by your home insurance, it's important to act quickly to find new coverage. Here's what to do.

1. Contact Your Insurance Company

Read the notice you received from your insurer to determine the reason for cancellation or nonrenewal. Contact the insurance company for an explanation if the reason is unclear.

2. See if You Can Reinstate the Policy

Ask the insurance carrier if there's anything you can do to avoid losing coverage. The cancellation may be due to an administrative error, for example. If late payment is the issue, perhaps bringing your account current would be enough to keep your coverage.

If you were dropped due to problems with your home's condition, find out whether you can reinstate coverage by making repairs. Homeowners in high-risk areas can sometimes get their insurance coverage back by making their homes safer from extreme weather. For example, you might be able to reduce your home's risk by installing storm windows, hurricane shutters or a wind- and fire-resistant roof.

3. Shop for New Insurance

If your insurance company refuses to reinstate your coverage, it's time to investigate your options. You can explore homeowners insurance rates online through marketplaces such as Gabi, a part of Experian. You can also work with insurance brokers, who sell insurance from a variety of different companies.

Learn more: How Often Should I Shop Around for Homeowners Insurance?

4. Compare Insurance Quotes

The Insurance Information Institute recommends getting quotes from at least three insurers to fully compare prices and coverage. While price is important, keep in mind that the cheapest home insurance might not be the best for your needs. You should also compare the types of coverage available, the menu of discounts, the range of deductibles and the company's reputation.

Learn more: How to Compare Home Insurance Policies

5. Look Into Government Plans

If you still can't find homeowners insurance, explore government-provided options. Every state offers some form of a FAIR (Fair Access to Insurance Requirements) plan, which is considered a last-resort option for securing home insurance. Some states operate a single plan, while others have several plans run by different insurers. Still other states have what are known as "assigned risk" plans, which are similar to FAIR plans.

FAIR plans typically cost more than standard homeowners insurance and provide scaled-back protection. Coverage under FAIR plans differs from state to state, but generally includes dwelling coverage. Coverage for personal belongings and other structures on your property is usually optional. Personal liability and loss-of-use coverage normally aren't available from FAIR plans.

Learn more: How to Pay for Emergency Home Repairs

How to Avoid Getting Dropped by Your Home Insurance

The following tips can help keep you from losing home insurance coverage.

• Make on-time premium payments. You typically have a grace period of about 30 days past your due date before your policy will lapse for nonpayment. Consider setting up autopay for your home insurance premiums or paying your annual premium upfront to reduce the risk of missing a payment.
• Keep up with maintenance and repairs. Consistent upkeep helps keep your home in good condition, reducing the risk of your insurance being canceled.
• Avoid frequent claims. Limit home insurance claims to situations where repairs would cost much more than your deductible, and avoid filing more than one claim every seven years.

Learn more: What Happens When You File a Homeowners Insurance Claim?

Other Ways to Protect Your Home

If you're struggling to get home insurance after being dropped, consider these safety nets in the meantime.

• Emergency fund: Building a solid emergency fund could help you pay for unexpected home repairs, such as a burst pipe or roof damage from a storm, while you try to get home insurance. Simplify saving by having part of your paycheck directly deposited into a savings account or setting up automatic transfers into savings.
• Home warranty: A home warranty pays to repair or replace major systems and appliances in your home if they fail due to normal use. While a home warranty won't replace home insurance, it could help cover other unexpected home expenses so you don't have to drain your emergency fund.
• Protection from risks: Take steps to protect your home from risks, such as hardening against wind damage with storm shutters, roof tie-downs and wind-rated garage doors. Firewise USA and the Insurance Institute for Business and Home Safety offer resources to help homeowners protect against wildfire.
• Consider moving: If you're in an area at high risk for wildfires, hurricanes or other extreme weather events, you may want to explore moving to a region that's less dangerous for greater peace of mind.

Tip: Although they're highly competitive, there are government grants that can help qualifying homeowners repair, modernize or upgrade their homes to remove safety hazards or meet building codes.

Frequently Asked Questions

The Bottom Line

Being dropped by your home insurance provider can be stressful, but the good news is that there are options. You may be able to find the coverage you need through another insurance provider, a FAIR plan or an assigned risk plan.

Keeping your credit in good shape could make it easier to find homeowners insurance. Insurance carriers in many states can use your credit-based insurance score when setting your premiums. Many of the factors affecting your consumer credit score are used to calculate your credit-based insurance score, so things like paying bills on time and minimizing credit utilization could help improve both types of scores. You can check your FICO^® Score^Θ and credit report for free from Experian to see where you stand and whether changes are necessary.