What to do When Your Insurance Company Drops you

Key Takeaways:

• Climate change events like wildfires can cause your insurer to drop your coverage.
• It’s stressful, yes -but you do have options.
• Keeping your home in top shape can be one defense against cancellation.

What’s happening in Hawaii is not only sad and tragic, it’s creating a long road to recovery which will cost billions of dollars. And it’s been occurring more and more frequently in locations across the planet. Families have been displaced, businesses have been leveled, not to mention the horrific harm to wildlife the fire caused.

After the flames subside, the nightmare’s hardly over. Will insurance be there to make you and your family whole? Perhaps the first time, but an unfortunate trend is developing. In places considered high risk for wildfires or earthquakes or flooding, insurers are dropping policyholders.

Why your home insurance could be cancelled

There are many reasons why a policy could be cancelled, including:

• Non-payment: If you fail to pay your premiums on time.
• Frequent claims: If you file multiple claims within a short period of time.
• Insurance fraud: It goes without saying. Don’t do it.
• Underwriting issues: If your home is not in good condition or if you live in a high-risk area.
• Nonrenewal: In some cases, insurers may decide not to renew policies in certain areas or for certain types of homes.

That final reason is what some homeowners are facing.

It’s important to take action immediately

1. Contact your insurance company: Find out what happened. Ask if there’s anything you can do to reinstate it.
2. Shop for a new policy: Once you know you’re not being renewed, start shopping right away. Get quotes from several different insurers to compare rates and coverage.
3. Consider a non-standard policy: If you have difficulty getting approved for a regular policy, you may want to consider a non-standard policy. These are typically more expensive and have fewer benefits, but they may be your only option if you have been canceled by a standard insurer.

Improving the condition of your home could prevent cancellation

This is a proactive move you can make before you even hear from your insurer. Show them you are on top of things. Send photos showing you have created a defensible space around your property. If your roof was in poor condition, you may be able to keep your policy by showing the company you upgraded it with a fire-resistant one!

It’s a different world. You want and need financial protection for you home, and the rules continue to be re-written. It’s important to do everything you can to protect your coverage.