Your current home insurance provider has cancelled your policy. This is a common situation, and understanding your rights as a customer will help you to avoid it.
A dropped homeowners' insurance policy, also called cancellation or nonrenewal coverage, can create a stressful situation. But it's not as bad as you think. Four steps will help you get your new homeowners' policy and back on track.
Your rights as an insurance policyholder
You have the right to receive a written notice at least 30 days before your policy is cancelled or non-renewed. You have time to find a new insurance company and avoid a gap of coverage.
You can file a claim with the state insurance regulator if your home insurance provider does not give you a written warning. They will review your complaint and decide if they want to take further action.
Your insurance cancellation rights
Insurance companies can cancel homeowner policies after 60 days if the customer has not paid their premiums, or committed fraud. The insurer can also cancel a policy after determining that the customer's property presents an unacceptable risk, such as if it has been damaged by fire or theft.
The condition of the home can also be a reason to cancel a policy. A home that is damaged by fire, for example, will cost more to cover than a vacation property.
Checking your credit score is also a smart idea before buying a homeowners' policy. It can be harder to obtain a home loan if you have a poor credit rating. Insurance companies may also view you as a high-risk.
If you fail to pay your premiums for too long, then you can have your home insurance cancelled. A lapse in coverage is a time period during which you have not paid your premiums. Insurance companies usually have grace periods where they will allow the policyholder to pay up for missed premiums.
The fact that you made multiple claims, or your home's new risk level are other reasons for dropping insurance. If your home has been neglected or there haven't been many claims, the risk level of your home can change.
What are your rights as a policyholder?
If you've dropped a previous policy, it may be difficult to obtain insurance again. This can be especially true if your credit score is low or if there are other issues. The best thing to do is talk with a financial advisor who can help you find coverage that fits your needs and budget.
If you don't have an agent, there are many online brokers that can help you compare rates and options. They are typically specialists for multiple home insurance providers and will be better able to determine which companies fit your risk profile.