When hail dents your siding or a tree falls on your roof, you’ll be glad you have homeowners insurance. However, companies aren’t required to provide you with coverage.
In fact, they can even cancel a policy in the middle of a term if they discover a change in circumstances that means an increased risk of a claim.
Amy Danise, chief insurance analyst for Forbes Advisor, says insurers can typically cancel a homeowners policy for any reason within 59 days of it being issued. After that, a company usually can only cancel if premiums aren’t paid, there is a change at your property or the insurer discovers you misrepresented something on your application.
If your insurance is canceled, you should receive a 30-day notice to find new coverage. But other insurers may balk at offering a policy to someone who had their prior plan revoked.
You can avoid that situation by understanding the following red flags that could cause a company to cancel your policy.
1. Trampolines and swimming pools
Something as simple as putting up a trampoline or installing a swimming pool could put your homeowners insurance in jeopardy.
“Why do they care?” asks Fabio Faschi, property and casualty team lead at Policygenius, an online insurance marketplace. The answer, he explains, is because trampolines and pools are associated with an increased risk of claims.
“Unfortunately, there are some real horror stories around these things,” Faschi tells Money Talks News. These include broken bones and accidental drownings.
It’s best to notify your insurer in advance of your plans to add either to your property. If an insurer doesn’t want to cover a pool or trampoline, Faschi says they may be willing to adjust your policy to specifically exclude claims related to them.
2. Running a business out of your home
Certain home businesses, such as day cares, could be grounds for a policy cancellation, according to Penny Gusner, senior consumer analyst with Insure.com.
“It’s important to give accurate information on your home insurance application or quote form,” Gusner tells Money Talks News. “Don’t try to hide anything because it will come out in the verification process, which can end up with you getting charged an additional premium or receiving a cancellation notice.”
3. A felon in the house
Sometimes, it’s who is living inside a home that can be a problem. An insurer might decide to cancel a policy if it discovers someone in the household has been convicted of a felony such as arson, Danise tells Money Talks News.
Insurers can’t cancel coverage midterm if the felony was disclosed in your initial application and they chose to issue a policy anyway. However, companies can cancel the insurance if such information was omitted or if someone with a felony conviction moves in at a later date.
4. Crime in the area
A rash of crime in your area may not result in an immediate cancellation, but it could affect your coverage going forward.
“Maybe you’ve had a lot of theft claims, and you’ll have to get a burglar alarm and have a higher deductible,” Faschi says.
Sometimes, though, an insurance company may simply decline to renew your policy if they believe you live in a high-risk area. In that case, you may need to work with an independent agent to shop around for other coverage. If no company wants to take the risk, your state may offer Fair Access to Insurance Requirements (FAIR) Plans that cover those who can’t buy insurance through no fault of their own.
“I’ve never seen someone who’s truly uninsurable,” Faschi says. “There are always options out there.”
5. The wrong breed of dog
Many companies don’t want to insure homes with dogs that they deem to be aggressive or unpredictable.
“Some home insurance companies maintain lists of dog breeds that they won’t insure,” Danise explains. “If you have one of these breeds, you could be denied coverage, or you may have to exclude your dog from liability coverage.”
Not every insurer has a list of banned breeds, but among those that do, Forbes Advisor found the following breeds were most often included. The percentage indicates what percent of the lists banned a particular breed.
- Pit bull — 100%
- Rottweiler — 100%
- Doberman pinscher — 100%
- Chow-chow — 95%
- Wolf dogs and wolf hybrids — 93%
- Presa Canario — 86%
- Akita — 79%
6. Poor home maintenance
Loose shingles and sagging siding can also lead to a cancellation notice in the mail. Having more than two layers of roofing material could also be problematic.
“In these cases, you might be offered a ‘roof exclusion’ instead of policy cancellation,” Danise says. “That means the insurer won’t pay a cent for roof damage from problems like wind, hail and rain.”
A poor exterior may also indicate to insurers that there is a problem inside, such as old electrical or plumbing systems. An insurer may conduct inspections of properties to check on their status, or they may become aware of maintenance risks after a claim. In some cases, you may be able to make repairs and keep your coverage. But other times, companies will simply cancel the policy.
7. A vacant building
As with poor maintenance, vacant buildings are associated with higher claims. Empty homes may be prone to vandalism. And should there be a problem inside the house, such as a water leak, it may not be noticed for an extended period.
“All of a sudden, it’s not the same risk for the insurance companies,” Faschi says.
Homeowners are likely to lose coverage after 60 days of vacancy, according to the International Risk Management Institute Inc. The institute notes that renting a property out or keeping it furnished may help avoid having the house categorized as vacant.
8. Too many claims
Insurance companies may also decline to renew a policy if they decide too many claims have been made on it.
Companies expect to pay a claim on a homeowners insurance policy every nine or 10 years, on average, according to Realtor.com. While multiple claims over the course of a decade may not be enough to trigger a cancellation, more than one claim per year could be problematic.
9. Natural disasters
Insurance companies that sustain significant losses after a hurricane, wildfire or other natural disaster may decide to no longer insure any properties in a geographic region. That is what’s happening in Florida, where it was recently reported that more than 50,000 policies won’t be renewed as a result of hurricane damage.
“It could be your area has been unlucky in recent years with a string of severe weather that led to claims to an abundance of claims, which will make insurers pull back on insuring homes in that vicinity,” Gusner says.
While such a decision may not be personal, the unfortunate reality is that, as insurers exit a market, it could result in less competition and higher premiums from the companies that remain.