Home insurance renewal — 3 easy steps

Roughly 30 days before the end of your policy, your insurance company will send you a homeowners insurance renewal statement. Policy renewal is when the insurance company informs you that your policy is set to renew for another year. It may also inform you of changes to your insurance premium or coverage amounts.

While policy renewal often happens automatically, it's important to use this time as an opportunity to review your home insurance coverage and make any necessary changes to your policy.

Your insurer also has the option to not renew your policy. This generally happens when the insurance company determines your house is too risky to insure — like if you live too close to a wildfire-prone area or you filed one too many claims in a given period of time. Insurers are generally required to send out nonrenewal notices around 45 to 60 days before the end of your policy period.

1. Check to see if your rates changed

Check for any changes to your homeowners insurance premiums. Your insurance company will likely inform you if your rates for the next term are higher or lower than your current rates. If you notice your insurance premiums are going up and you’re not sure of the reason, reach out to your insurance agent. A few reasons your rates may have gone up include:

• Your coverage went up. Your rates are largely determined by the coverage amounts in your policy. Since your dwelling coverage amount is based on the rebuild value of your home — and rebuild costs generally go up from year to year — there’s a chance your rates increased because your dwelling limit went up.

• Your home is older or due for upgrades. Older homes are constructed with materials and certain architectural features that aren't widely used anymore, so it generally costs more to rebuild them to their original specifications. If you have a bad roof or your plumbing is brittle and is in need of being replaced, that can also lead to higher premiums at renewal.

• Your credit score went down. If your credit score went from great to poor in the matter of a year, that could be another reason why your rates went up. Homeowners with low credit scores are considered high risk, as insurance companies have found that property owners with poor credit are more likely to make frequent claims.

• You filed a claim. If you recently filed a claim or have a long claims history, that could be another reason why your rates went up at renewal. Keep in mind that your insurer doesn’t have to wait until renewal to increase your premiums after a claim.

• Your home is exposed to more risks. If your community recently experienced a hurricane, tornado or wildfire, that could be another reason why your insurance rates went up.

If your homeowners insurance premiums went up anywhere from 9–10%, it’s generally suggested that you re-shop your policy.

2. Make necessary updates to your policy

You can also use insurance renewal as an opportunity to inform your insurance company of an improvements or upgrades to your home; major purchases like an engagement ring or new computer; or lifestyle changes, like if you sent your kid off to college or you started a new home business that needs additional coverage.

If you recently bought a new piece of jewelry, for example, your insurer will likely suggest that you itemize it with a scheduled personal property endorsement to ensure it’s fully covered.

Renewal is also a great time to ask about discounts and different ways to save on homeowners insurance. One way to do this is by increasing your out-of-pocket policy deductible. Just make sure you set it an amount you can afford in the event of a claim.

3. Review changes to your coverage

Be sure to check for any cover changes made by the insurance company. Your insurer may have — at no additional cost — added coverage to your policy that you should know about. It could have also added an exclusion to your policy to indicate that it no longer covers wildfire damage or dog-related liability.

It’s also possible that your insurance company increased your dwelling coverage amount to account for inflation. Since your other structures, personal property, and loss of use coverages are set as a percentage of your dwelling coverage, coverage limits for those components may have gone up as well.

How can I get homeowners insurance at nonrenewal?

In the event your insurance company sends you a notice of nonrenewal, you'll likely have to start shopping around for a replacement policy. But before doing that, double check to see if you were lawfully dropped from your policy. If the insurance company broke any rules or didn't provide a reason for nonrenewal when they were supposed to, you may be able to appeal their decision and keep your coverage.

Know your rights

State insurance departments have regulations in place to keep insurance companies in check. These regulations stipulate when insurers can and cannot cancel policies or increase insurance premiums and they also have rules for nonrenewal.

In New York, for example, an insurance company must give you 45 to 60 days notice from when you’re informed of nonrenewal until the end of your policy term. Insurers are also required to provide a reason for nonrenewal.

If you think the reason for nonrenewal is unfair, you can file a complaint with your state’s insurance department.

Talk to your mortgage lender

Since your mortgage lender is listed as an additional insured on the policy, they will likely also be sent a notice of nonrenewal by your insurance company. If you’re appealing the nonrenewal decision, be sure to inform your mortgage company as soon as possible. If you’re looking for new coverage, inform your lender that you’re actively pursuing a replacement policy.

Shop around

If you were recently nonrenewed, worry not, you have at least a month and a half to find a replacement policy. If you’re not able to find homeowners insurance on the private market, look into a Fair Access to Insurance Requirements, or FAIR Plan, which provides last-resort coverage for high-risk properties that have been turned down by three or more insurance companies.