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Homeowners insurance after cancellation, lapse or non-renewal

Receiving a notice of cancellation or non-renewal from your insurance company can be an unpleasant surprise. Home insurance cancellation can be frustrating, as finding a new policy after being dropped can sometimes be a challenge.

Because homeowners insurance is typically required by your mortgage lender, it’s imperative to find a new insurance policy in order to protect your investment and satisfy your lender’s requirements. Read on to discover why insurance companies drop policyholders, as well as how to get a home insurance policy after you’ve been dropped. 

Key Takeaways:


  • Cancellation by an insurer usually only occurs through a breach of policy terms or non-payment of premiums.
  • Non-renewals occur at the end of the policy period and come with a notice beforehand.
  • The best option most homeowners have after being dropped from coverage is to shop around with many companies are explore your state's FAIR plan

Home insurance cancellation vs. non-renewal

An insurance cancellation and a non-renewal each signify a break between you and your insurer, but they occur for different reasons. Let's explore each term and understand what may lead to policy cancellations and non-renewals.

question
Home insurance cancellation

Technically, a homeowners insurance company can cancel your policy for any reason within 60 days of the policy's inception. Once your policy has been active for more than 60 days, a cancellation usually only happens in one of two circumstances: non-payment of premiums or a breach of policy terms

Missing payments puts you at risk of being dropped by your carrier. Similarly, any instance of fraud can be grounds for cancellation. This may include lying about a claim or misrepresenting information on your application.

question
Home insurance non-renewal

Non-renewals usually occur near the end of a policy period. If an insurer decides not to renew your policy, you will be notified beforehand. Legal notification requirements vary by state, but insurers are usually required to give customers between 30 and 60 days notice in the event of non-renewal.

Bear in mind a non-renewal can come from the homeowner. If you shop around and find better coverage at a cheaper rate, moving on from your current home insurance company to another is considered a non-renewal.


Common reasons for home insurance non-renewal

There are a number of reasons an insurance provider might elect to drop a policyholder. Non-renewal may occur as a result of a policyholder’s profile, though it can also stem from a higher-level change at an insurance company. Below are some of the primary reasons for insurance non-renewal:

Option 1: You filed too many insurance claims 

Those with extensive claims history are considered high-risk by most insurance companies. Not only are high-risk homeowners more likely to be dropped by their carriers, but they also face higher insurance premiums on average when they find a new insurer. Learn more about how to get insurance as a high-risk homeowner.

claims

Option 2: Changes in the company’s coverage options or area(s) of coverage

In some cases, an insurer may find that certain coverages are not financially viable. This means that — at the minimum — you would essentially have a new policy after your current one ends. In some cases you could be non-renewed, forcing you to look elsewhere for coverage.

Homeowners in California have struggled with such changes in recent years as many home insurance companies have attempted to void and refuse coverage in areas prone to wildfires or other natural disasters

 

Option 3: Your insurance profile no longer meets the company's requirements 

Your personal profile has an impact on whether or not an insurance company wants to provide coverage. Essentially, if the risk that you represent is too great to make financial sense, your insurer is not likely to renew your policy.

This could include situations as varied as the following:

  • You own a dog breed considered dangerous
  • A home inspection finds unacceptable risks (age of the roof, HVAC system, etc.)
  • Changes or renovations made to your home or property violate the policy’s terms
  • Adding a business to your home
home

How to cancel a homeowners insurance policy

If you choose to cancel your policy with your home insurance provider, you can get the process started by contacting your agent or a company representative. Generally, you cannot cancel your policy online. After you communicate your intent to cancel the policy, you will have to request this in writing by sending a letter. This letter should contain identifiable personal information like your name, policy number and the insured address. You will also need to specify the date you want your coverage terminated.

question
Can I cancel my policy at any time?

As long as the policy has been active for a minimum of 60 days, policyholders can drop their coverage at any time after this period.

question
Is there a penalty for canceling homeowners insurance?

Insurance companies do not charge fees or penalties if you simply choose to not renew the policy at the end of its term. However, if you cancel midway through a policy period, you should check your policy documents or call your insurer to see if a penalty would be imposed if this is the case — sometimes, it actually costs more to switch home insurance companies if there are fees involved.

question
Can I get a refund if I cancel my homeowners policy?

This depends on your policy term and payment plan. If the policy was paid in full for the year before it was canceled, you can expect a pro-rated refund to be issued following the last day of coverage. If you pay monthly, you won't be eligible as you haven't paid enough to qualify for one.

question
What happens if I cancel my home insurance coverage?

Coverage will cease after the policy termination date. If you've switched companies, you should notify your mortgage lender as soon as possible; failing to do so can result in your lender charging you for force-placed insurance on your home, which will generally be more expensive than conventional home insurance. In worst-case scenarios, not replacing your coverage can be seen as a breach of your mortgage agreement, and can result in the lender eventually seeking to foreclose on the property. It is critical that homeowners maintain the lender's desired level of coverage and alert them to any changes in the policy.


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Home insurance after a lapse

Homeowners insurance lapses when a policyholder is unable to make payments for multiple monthly premiums. If you miss a payment, the insurance company will give you 30 days to complete the payment before canceling your policy. If possible, it’s best to avoid a lapse in coverage to the best of your ability. While it’s not the end of the world, it can make getting future insurance coverage slightly more challenging.

It may also be harder to get approved for another insurance policy after a lapse. Policyholders whose insurance has been canceled by the company have a more challenging road ahead when it comes to finding insurance coverage. 

If for some reason your policy does lapse, you have time to get it back on track. Insurers often offer grace periods and adequate notice (usually 30 days) to pay the premium and reinstate the policy.

Why to avoid a lapse in coverage

An important reason to avoid coverage lapses is to keep your home and its contents protected. When insurance lapses, your policy is no longer valid, leaving your home and belongings vulnerable. If your home is financed through a mortgage lender that requires insurance coverage, a lapse could be costly: in the event of a lapse, your mortgage lender will find a new insurer on your behalf, often resulting in higher premiums for which you will be responsible.


How to get a new home insurance policy after being dropped

Home insurance cancellation can be frustrating and worrying. Finding a new policy that doesn’t drown you in higher premiums can be difficult. Chances are your search could be difficult because of the same reasons you were dropped.

However, going without coverage is inadvisable for many reasons, not least that gaps in your coverage will negatively affect your rates or ability to find affordable coverage.

The best option that most homeowners have is to shop around. While having a high number of home insurance claims is likely to make your rates higher, it’s very likely that another company will be able to offer you an affordable policy. 

While a lapse in coverage may result in higher premiums, it’s still very likely that another company will offer you an affordable policy.

If you are struggling to find affordable homeowners insurance, you might consider whether or not your state offers any relief. Many states have what is known as a FAIR plan, which can help to alleviate the financial burden of those who may not otherwise be able to afford a home insurance policy. The Fair Access to Insurance Requirements (FAIR) Plan is a government-run program that can help homeowners find basic coverage. These policies do not provide as much coverage as a private plan but are an option of last resort that helps homeowners find coverage and adhere to the requirements of their lending company.


How to save money after a homeowners insurance cancellation

In order to satisfy the requirements of your mortgage company, you will have to find homeowners coverage. Those who have had their policies canceled may find getting cheap coverage to be difficult, but there are ways to save money. 

For instance, look for discounts by finding an insurance provider who can offer both home and auto insurance under the same roof. Likewise, carrying a higher deductible can also save money on monthly payments while simultaneously discouraging you from filing unnecessary claims, thereby reducing your chance of being dropped by your insurer. 

Overall, the best way to save on homeowners insurance is to shop around. The Zebra can help you find insurance quotes from the nation’s top insurance companies, allowing you to compare rates and policy details.

For those who have unique homeowners insurance needs, The Zebra’s in-house insurance agents can help answer questions and find a policy that fits your needs.

Simply enter your ZIP code or give us a call at 1-888-255-4364 to get started.

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Frequently asked questions

In short, yes, but only in certain situations. Insurance companies can usually drop you for any reason during the first 60 days of your policy. However, to be dropped in the middle of a policy period, policyholders will have had to have missed payments or committed fraud that violates the policy terms.  The most common way for an insurance provider to drop insurance coverage is through non-renewal. This will happen at the end of your current policy period. You will receive a notice of cancellation informing you of the decision, giving you enough time to secure another home insurance policy.  Policyholders facing non-renewal or cancellation must be given between 30 or 60 days' notice (depending on your state) from an insurance company if it is planning on canceling your coverage.

There are steps that you can take. If you feel that your home policy is being unjustly canceled, your first course of action is to call your insurer. If that does not yield the results you are looking for, you could consider filing a complaint with your state’s department of insurance. Keep in mind, however, that a non-renewal may come about for reasons unrelated to you. This can include changes in their coverage offerings or the company simply writing fewer policies in certain areas.

To avoid homeowners policy cancellation, keep your home well-maintained and pay insurance premiums on time (at a minimum). Think twice about filing claims when the damages can be fixed out-of-pocket, as too many claims can make you seem like a risk to an insurer. It can also be a good idea to have your insurance company do an inspection before writing your policy. These actions — along with abiding by your insurance provider’s guidelines — can keep you from being surprised by a cancellation notice or non-renewal.

The best option that most homeowners have is to shop around. While having a high number of home insurance claims is likely to make your rates higher, it’s very likely that another company will be able to offer you an affordable policy. If you are struggling to find affordable homeowners insurance, you might consider whether or not your state offers any relief. Many states have what is known as a FAIR plan, which can help to alleviate the financial burden of those who may not otherwise be able to afford a home insurance policy.

RECENT QUESTIONS

Should I cancel my policy if I sold my vehicle and won't be getting another car for a month?

Canceling your auto insurance when you sell a vehicle sounds like a good idea until you realize the potential pitfalls of doing so. While it may not make sense to maintain auto insurance when you no longer own a vehicle, consider the fact that you still have to have insurance to test drive a vehicle that you are thinking about purchasing.
Mar 9, 2016 Lincoln, NE

If my Alabama registration tags expire, do I still have to carry insurance?

Alabama requires that registered vehicles must also be insured. If your registration tags expire and you want to renew them then you must have active auto insurance before the new tags will be issued.
Aug 12, 2017 Tuscaloosa, AL

Can Esurance deny a refund if I forgot to cancel my policy when I switched to a new company?

This sounds like an company issue and not a state law. Insurance companies in Illinois are legally required to issue refunds for "unearned premium", but you didn't prepay your bill.
Mar 8, 2017 Addison, IL

Will my down payment be refunded if I cancel my insurance during the first month?

There is no guarantee of a refund, so you would have to contact your insurance provider to find out if you are eligible for a refund as each company operates a bit differently with policy cancellations in the first month of coverage. The same thing goes for whether or not they will notify your lien holder of the cancellation.
Dec 31, 2016 Dace City, FL

About The Zebra

The Zebra is not an insurance company. We publish data-backed, expert-reviewed resources to help consumers make more informed insurance decisions.

  • The Zebra’s insurance content is written and reviewed for accuracy by licensed insurance agents.
  • The Zebra’s insurance content is not subject to review or alteration by insurance companies or partners.
  • The Zebra’s editorial team operates independently of the company’s partnerships and commercialization interests, publishing unbiased information for consumer benefit.
  • The auto insurance rates published on The Zebra’s pages are based on a comprehensive analysis of car insurance pricing data, evaluating more than 83 million insurance rates from across the United States.