If your home insurance gets canceled, immediately contact your insurance company to find out if it can be reversed; in the meantime, start shopping for new coverage. Homeowners insurance cancellations may happen due to increased risk of natural disasters such as wildfires or storms, nonpayment of premiums, or other issues.
Last updated: Aug 14, 2024 Compare quotes in less than 5 minutes
Written by Leslie Kasperowicz
Executive EditorLeslie Kasperowicz is an insurance expert with four years of direct agency experience and over a decade of creating educational content to help insurance shoppers make confident, informed decisions.
Reviewed by John McCormick
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If your home insurance is canceled or your insurance company decides not to renew your policy, you'll need to find out why and look for new coverage.
When you get a home insurance cancellation notice, contact your insurance company immediately to see if you can reverse it. In the meantime, start shopping around. Homeowners insurance can't be canceled without notice, and there are limited homeowners insurance cancellation reasons allowed by law. You will have time to find a new policy or find a solution with your current insurer.
Buying homeowners insurance can become more difficult after a cancellation, but you still have options. Read on to find out why home insurance policies are canceled and what to do if your home insurance is canceled.
If you receive a notice that your homeowners insurance is being canceled or non-renewed, there are a few steps to take:
Insurance companies are required to notify homeowners in advance when a policy is being canceled. Laws regarding cancellation and non-renewal notices vary by state.
In California, for example, the insurer must send a non-renewal notice at least 45 days before cancellation. In many cases, if an insurance company fails to inform you in writing, your policy will remain in place until 45 days after the notice is sent.
Depending on why the insurance provider canceled the home insurance policy, you may be able to reinstate your policy. If not, you'll need to find a new insurer.
If the insurer canceled your coverage because of an unacceptable risk on your property, repairing the issue could result in your policy being reinstated. If your insurer still refuses to insure you, you can dispute the cancellation and request remediation or file a complaint with the state department that oversees the local insurance industry.
However, if the insurer canceled your home insurance because you filed too many insurance claims or gave false information on your application, it's unlikely that your policy will be reinstated. You may also have difficulty finding another provider.
If your policy is canceled for nonpayment, call the insurer and see if getting caught up on payments will quickly restore coverage.
If your insurer canceled your coverage, call the insurer and ask it to reconsider. If it won’t, shop for a new policy. If you cannot find one, look to coverage from your state’s Fair Access to Insurance Requirements (FAIR) plan.
Yes, an insurance company can drop your policy in specific circumstances, although the word "drop" implies that it's sudden. However, this is not the case. The company is required to give notice of home insurance cancellation with time to find a new policy.
Home insurance is a contract, and if you violate that contract, your home insurance company can cancel your policy. Additionally, if your home becomes too much of a risk for the company, it can choose to non-renew the policy — which means that when the policy term ends, the company will not renew it.
In some cases, it's not just you. Insurance companies may cancel homeowners insurance policies in a certain area, withdraw from a state altogether or even go out of business. While events like these are not the homeowner's fault, they still leave people searching for new home insurance. The current home insurance crisis is affecting some places more than others.
It's important to note that the contract goes both ways. An insurer has to have an acceptable reason to cancel your coverage. State laws outline the situations in which a home insurance company can cancel or non-renew a policy.
Homeowners insurance cancellation reasons may vary, but the bottom line is the same in all cases: An insurance company can cancel your home insurance policy (or non-renew it) only for specific reasons spelled out in state law. Those reasons are also listed in your policy.
The most common of homeowners insurance cancellation reasons is that something about your property has become too risky, or the company has discovered a risk it wasn't aware of when the policy was issued. Home insurance canceled for underwriting reasons would fall under this category.
Risks for policy cancellation include:
Your insurer can cancel your homeowners insurance policy, but only under certain circumstances.
For example, if you miss your payments or commit a form of fraud, your policy might be subject to cancellation. In addition, if the insurer discovers that you misrepresented something on your application, this might also be grounds for cancellation.
In other circumstances, the insurer might have the right to decide not to renew your policy when it expires. This can happen if you have filed too many claims, or if an inspection or other information reveals that something has changed that significantly increased the risk to your property.
Other potential sources of nonrenewal might include a change in your credit score or indications that you have not properly maintained or repaired the home.
Finally, some insurers are now exiting markets that they deem too risky, such as California or Florida. This could be another reason that an insurer would decide not to continue to insure your home.
If your homeowners insurance is canceled, here are a few different things that could occur.
“The issue with lender-placed insurance is that it protects the mortgage company, but not the homeowner," Clausen Lozier says. ”Typically, it's more expensive and doesn't provide coverage for personal property and contents and doesn't cover additional living expenses if you have a loss and have to leave your home."
If your homeowners insurance is canceled, you must replace the policy with new coverage right away. Not only does homeowners insurance protect your property, but if you have a mortgage, your lender will insist you maintain coverage.
If you fail to purchase replacement homeowners insurance coverage, your insurance company has the right to purchase its own policy on the property and charge you for it. This is known as “forced-placed” or “lender-placed” insurance.
The cost of such coverage is often much higher – sometimes twice as high -- than what you would pay for purchasing your own policy, according to the Consumer Financial Protection Bureau. So, it is much better to immediately purchase new coverage if your policy is canceled.
There are two types of home insurance cancellation: non-renewal and mid-term cancellation. The difference between non-renewal and cancellation is when the cancellation occurs, as both involve the insurance company canceling your policy.
Non-renewal is when the insurance company decides not to renew your policy at the end of the term. Essentially, it is canceling your policy effective on the last day of the current policy term or, more accurately, simply not renewing it. Most cancellations are actually non-renewals.
Cancellation is effective in the middle of the policy term. There are only a few instances when an insurance company can drop you mid-term. They usually involve things like insurance fraud or non-payment of premiums. Even in an “immediate” cancellation, the insurance company is required by law to give you notice.
There are laws in place to protect homeowners from unfair practices on the part of insurance companies. The laws vary by state, but in general your rights should include:
Homeowners insurance cancellation laws are determined by the state in which you live. For example, the reasons that allow an insurer to cancel your policy can vary from state to state.
An insurer typically must notify you in advance when it is going to cancel your policy. However, each state has its own rules for how many days of notice it must provide before canceling the policy.
Some states also require the insurer to explain why it is canceling the policy.
As soon as you know your insurance policy is being canceled, start talking to other insurance companies. An independent agent or broker can be helpful since they know multiple insurance providers and which accept houses that have been previously dropped.
If the property needs repairs that you can't afford to complete right now, you may need to look for non-standard coverage (coverage from a company that specializes in high-risk insurance).
"Most insurance companies underwrite or review the eligibility of a property upfront. Existing damage, depending on how bad and what kind, could make a property ineligible for coverage with the 'normal' home insurance companies," says Balsiger. Balsiger suggests looking for state assistance.
If you have difficulty getting insurance, call your state's Department of Insurance and ask for information about the FAIR plan. The downside is that you'll probably pay higher premiums, but that's better than being uninsured.
FAIR Plans, or Fair Access to Insurance Requirements Plans, are also options for high-risk homeowners. A FAIR plan allows high-risk homeowners to get coverage, but they often come with higher premiums and inflexible terms and conditions. Most states offer a last-resort option for insurance, such as a FAIR plan or a state-run insurer like Florida's Citizens Insurance.
In most cases, yes. Finding a new homeowners insurance policy can be challenging if your home insurance has been canceled. Insurance companies consider a person's claims and coverage history when deciding whether they qualify for coverage.
If you have had a lapse in your homeowners coverage, you will likely find it harder to get a new policy, but you can find coverage by shopping around with multiple companies. Because a lapse in coverage increases risk and therefore rates, it's best to avoid it whenever possible. If your policy is being canceled, shop for new coverage immediately, before it lapses.
To reduce your risk of a home insurance cancellation, make sure you've addressed anything an insurer might deem an unacceptable risk. Keeping up with routine maintenance on your home can also help you avoid big-ticket repairs when it's time to renew your policy.
Don't file small claims. If the claim is not too much over the deductible, it might not be worth filing.
The Berger Singerman Law Firm’s Clausen Lozier advises homeowners to ensure their insurance company inspects their homes before writing a new policy. She says to videotape and photograph the property so you have a record of what the property looked like at the time the insurance company insured it.
Insurance companies report claims and cancellations to the Comprehensive Loss Underwriting Exchange (CLUE) database. The CLUE records typically last five to seven years.
Lapses occur when your current policy runs out, and you don’t have new coverage. This concerns insurance companies because it makes the home more of a risk. It’s best to get new coverage before your old policy cancels, but if you do have a lapse, it might mean higher premiums and difficulty finding a new policy.
There's no set number of claims that can trigger a policy cancellation. It usually depends on the severity of claims and the number of claims you have filed during a specific period. It also depends on the type of claims, since an insurer generally can't cancel your policy for multiple weather-related claims.
In general, as long as you have been a good customer and haven't made many claims in the past, your homeowners insurance company will not drop you after one claim. It’s illegal to cancel your insurance policy just because you filed a claim.
However, if the company discovers something during the investigation of the claim that is a reason for cancellation, such as negligence on your part that led to the damage, your policy can be canceled.
Yes. Underwriting is the process by which an insurance company evaluates risk and determines eligibility and rates. Most non-renewals are for underwriting reasons.
