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, senior editor for online insurance marketplace EverQuote, says insurers can typically cancel a homeowner’s 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 says. 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. 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 they discover someone in the household has been convicted of a felony such as arson, Danise says.
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.
3. 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 which 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.”
4. The wrong breed of dog
Many companies don’t want to insure homes with dogs that they deem to be aggressive or unpredictable. More than half of the 50 largest homeowners insurance company groups have at least one subsidiary with a list of banned dogs, according to an analysis of state filings by EverQuote.
The following breeds of dogs are prohibited by more than half of the insurers with lists reviewed by EverQuote. The percentage indicates what percent of the lists banned a particular breed.
- Pitbull — 100%
- Rottweiler — 100%
- Chow Chow — 86%
- Presa Canario — 86%
- Akita — 82%
- Dobermann Pinscher — 75%
- Wolf hybrids — 68%
- Mastiff — 54%
5. Poor home maintenance
Loose shingles and sagging siding can also lead to a cancellation notice in the mail.
“Poor home maintenance leads to claims,” Danise says. Roofs seem to be of particular concern for insurers nowadays, and high winds and hail are more likely to cause damage to a property with an exterior that hasn’t been maintained. 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.
6. 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.
7. 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, Realtor.com says. 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.
8. 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 happened in 2011, when Allstate decided not to renew the policies of 45,000 North Carolina homeowners after Hurricane Irene made landfall unless the coverage was bundled with auto insurance.
“It could have nothing to do with you,” Danise says. “Don’t take it personally.”
While it 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.
Have you ever found yourself on the receiving end of a cancellation notice? If so, help other readers by sharing how you found new coverage. Leave a comment below or on our Facebook page.