Receiving a letter in the mail that your homeowners insurance will not be renewed the next fiscal year can be shocking and disheartening. You may have filed two or three claims and still had your insurance company cancel your policy. You may have filed only one claim in your time with your insurance and still your provider cancels your policy.
It’s frustrating and confusing but perfectly legal and all too common leaving many homeowners with a few options moving forward. But what can you do in this situation? Why did your insurance company cancel you in the first place? These questions will arise when you receive that non renew letter in the mail.
You’re not alone though, and you’re not stranded without any options. Your insurance company may have started a difficult path to getting back your insurance, but at the least there is a path you can follow. It all starts with knowing why your insurance policy was canceled.
Your insurance company does have to notify you before canceling your policy. The amount of time allotted before the cancellation takes place does vary from state to state. You could be given as little as 20 days from when the message was sent, not delivered. If you’ve changed addresses without notifying your insurance company or your letter was lost in the mail, your cancellation will not be delayed and will still take place.
Why your insurance company canceled your policy
It’s within the law for your insurance to cancel your policy even if you’ve had one claim in the past five years. Homeowners insurance is rarely used by most homeowners. The average homeowner files a claim once every seven years and most insurance premiums are used to pay for the rare case of major repair costs on a client’s home.
Yes, you may have only filed the one claim in your time with your insurance company but in the eyes of your insurance, you’re likely to file more claims in the near future. Statistically, homeowners who file a claim are more likely to file subsequent claims than a homeowner who has not filed the initial claim. Because of this, insurance companies will evaluate your claim and situation and decide if you’re a potential risk for more claims.
The second reason why your insurance company may have canceled your policy also relates to future claims. If you have filed a small claim that your insurance company views as a possibility for larger claims down the road, they may cancel your policy. This means that if your house was damaged due to a fire from unknown circumstances when your children were left unattended and you filed a claim for repairs, your insurance could cancel your policy. Not because your claim was too much, but because the risk of a future claim for the entire house has been heightened due to the provided circumstances.
Knowing why your insurance was canceled is the first step to getting your policy back.
Try to reinstate your policy
Once your insurance policy is canceled by your provider, it’s exponentially harder to go to a different company and get a good deal on coverage. They’ll see your claims history and see you as a potential risk just as your previous insurance company did. Your best option is to try to convince your insurance company to reinstate your policy.
By knowing what got your policy canceled in the first place, you’re able to know what you need to change to convince your company to take you back. Many homeowners get their policies canceled because they file numerous claims in a short span of time. If this is you, you can contact your insurance company and try to convince them that you weren’t aware this would cancel your policy and prove to them you will not make these minor claims in the future. Along with this, you may have to put down a larger deductible as proof that you’re not going to file as many claims.
If your insurance canceled your policy because of the risk of a minor claim becoming a major one in the future, like the fire example above, your insurance may require you to take preventative measures before reinstating you. In this case, it could be fire safety classes for your children or kid-proofing your home. Speak with your insurance agent, and they may help you through the necessary steps to be reinstated.
Your insurance agent should be your conduit through which you speak with your insurance company. They’ll know your situation best and the requirements your insurance company has for you to be reinstated. They will be able to find the best track for you to get your policy back.
If you want to change insurance providers after having your first policy canceled, the best way to do so is to be reinstated on your homeowners insurance. Once you’ve been granted your policy back, go the five years to clean your claim history and then begin to search for different companies. Unfortunately, the best option once you’ve had your claim canceled is to convince your insurance company otherwise. Luckily your insurance agent should be there to help you navigate this process.