If your homeowners insurance was recently nonrenewed, find out the reasoning for your company’s decision and how to get a replacement policy for your home.
Published May 21, 2020|6 min read
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Renewal is a good opportunity for you to review your rates, coverage, and update your policy to reflect home, inventory, or lifestyle changes. Once you’ve gone over everything, you simply sign the renewal document, send it back to your insurer, and your home is insured for another year.
But what if your insurance company informs you that they’re not renewing your policy? Or on the flip side, what if you decide to nonrenew your policy once it expires? Is a month and change enough time to shop around and find adequate coverage for your home?
The answer is yes, but don’t wait too long. If you reach the end of your policy term and don’t have new insurance, your coverage could lapse, meaning you won’t be covered if something bad happens to your home. If you have a mortgage on your home, your lender will likely be notified of your lapse and may insure your home on your behalf. You’ll want to avoid this, as lender-placed insurance is more expensive than normal insurance and the coverage itself is subpar. Having a coverage lapse on your record could also make it more difficult for you to get insured in the future and could affect your insurance premiums.
As your policy nears its expiration date, your insurance company may inform you that it won’t be renewed
Your insurance company usually needs to include a reason for nonrenewal
The best way to shop for coverage after nonrenewal is to use an insurance marketplace where you can compare multiple policies at once
You may be able to get insured through your state’s FAIR Plan if you can’t find coverage on the private market
State laws require insurance companies to inform policyholders of nonrenewal anywhere from a month to three months before the policy’s expiration date. The required number of days notice varies from state to state. In New York, for example, insurers must give you 45–60 days notice and explain the reason for nonrenewal. In some states, an explanation for nonrenewal is not required.
Be sure to check with your state’s department of insurance to see what the rules are for nonrenewal. If you think your company’s nonrenewal decision was unfair or you want a more detailed explanation, contact the insurance company. If you’re still not satisfied, contact your state’s department of insurance to file a complaint. When you file, your state’s consumer protections agency will evaluate the complaint to see if there was any wrongdoing on the part of the insurance company. If they determine that your insurance company screwed you over, you may be able to reinstate your policy.
Here are a few reasons why your policy may have been nonrenewed:
This is probably the most commonly cited reason for insurers to drop you from your policy at renewal. It could be that you filed too many claims within the designated three- or five-year window or you filed a claim that insurance companies generally don’t look highly upon, like a water damage, dog bite, theft, or fire claim.
Keep in mind that most states have consumer protections in place that dictate when a company is allowed to raise your rates or nonrenew your policy as it relates to insurance claims. For example, certain states prohibit rate increases or nonrenewal for basic claim inquiries, zero-dollar claims (claims that didn’t result in a payout), and first-time claims. There are also states that prohibit companies from using weather or catastrophe claims as grounds for nonrenewal.
Your company may also nonrenew your policy if there is a substantial change in the risk of insuring your home. In other words, if your insurer determines that your home is significantly more likely to be damaged by a peril covered by your policy than it was before, they may choose to not renew your policy when it expires. This is often the reason for nonrenewal in high-risk wildfire regions and hurricane-prone coastal communities.
Your insurance company may have nonrenewed your policy for the simple reason that they’re cutting down on a particular line of insurance or pulling out of a state or region. Insurance companies are businesses first and foremost, and one of the key indicators of company viability is shareholder profits. If cutting down on a particular line of business or pulling out of a high-risk state like California limits losses and increases shareholder profits, that may be their course of action and many policyholders could be nonrenewed for that reason.
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The cliché breakup line: “It’s not you, it’s me”, can also apply to homeowners insurance nonrenewal. While that classic breakup line is one of the last things you want to hear at the conclusion of a relationship, it’s not the worst thing to hear from your insurance company.
In many cases, your insurance company will nonrenew your policy because they’re simply cutting business or their risk appetite changed, not because of anything you did. Whatever the reason, it often won’t affect your ability to get coverage in the future, and in some cases you might even find that you’re able to get lower rates with a new company when you compare and re-shop your homeowners insurance.
However, if your company is nonrenewing your policy because you filed too many claims or you live in an area where every insurer seems to be fleeing because of the high catastrophe risk, you may find that getting insured on the private market is a little more difficult. We’ll explain a workaround to this in the next section.
Before you begin evaluating replacement insurance, be sure to check with your state’s department of insurance to see if the company gave you enough of a heads up. Insurance companies in Florida, for example, must send a nonrenewal notice at least 100 days prior to the policy expiration date, and the notice must include a reason.
Assuming they gave you enough of a heads up and the reasoning is legit, here are a couple of ways you can get covered after nonrenewal:
The best way to compare coverage and rates is to use an insurance marketplace like Policygenius. Many insurance marketplaces can provide quote comparisons on the spot, and applying often takes as little as 5 minutes.
A good comparison website will feature standard insurance companies — your Travelers, MetLifes, and Progressives — as well as insurtech disruptors like Hippo and Swyfft and companies that specialize in high-risk homes like Foremost and other surplus lines carriers.
If you’re having trouble finding coverage on the private company market, you may be able to get a form of last-resort coverage called a FAIR (Fair Access to Insurance Requirements) Plan. A FAIR Plan is a high-risk insurance pool that is administered by your state’s department of insurance and funded by private companies that are registered, or admitted, with the state.
Most (but not all) states have FAIR Plans, and each has its own policyholder benchmarks for approval. Many states, for example, require policyholders to prove that they’ve been turned down by at least three insurance companies before they’ll be eligible for a FAIR Plan.
It’s also worth noting that FAIR Plans have strict limits on the maximum amount of policy coverage. Your home may only be covered up to a certain limit and the dwelling and personal property are typically only covered at their actual cash value. Additionally, FAIR Plans don’t normally include liability protection or additional coverage for expensive valuables.