What Actions to Take if Your Home Insurance Is Dropped

What To Do if You Are Dropped From Your Home Insurance

Table of Contents

• Why Your Home Insurance Might Be Dropped
• Is It Hard to Get Insurance After Being Dropped?
• What Happens to Your Mortgage?
• Can You Reinstate a Canceled Policy?
• Steps to Take After Being Dropped
• How to Avoid Future Cancellations

Being dropped by your home insurance company is a stressful ordeal that can leave your property unprotected. Insurers may cancel your policy for reasons like multiple claims, non-payment of premiums, or failure to maintain your home. Without coverage, you’re financially vulnerable to damages from events like fires or storms. For instance, if your policy is canceled after filing several claims post-storm, securing new insurance can be challenging and costly. Taking swift action is critical to restore coverage and protect your home and finances.

Why Your Home Insurance Might Be Dropped

Insurance companies may drop your policy for various reasons, including:

• Multiple Claims: Filing several claims in a short period, such as for storm or water damage, may signal high risk.
• Non-Payment: Missing premium payments can lead to cancellation.
• Property Issues: Failing to address maintenance issues, like a damaged roof, may violate policy terms.
• High-Risk Factors: Living in an area prone to natural disasters or owning high-risk items (e.g., certain dog breeds) can prompt cancellation.

Understanding the reason for cancellation helps you address the issue and find new coverage. Learn more about insurance cancellations at Insurance Information Institute.

Is It Hard to Get Insurance After Being Dropped?

Yes, securing new homeowners insurance after being dropped can be difficult. Insurers often view canceled policyholders as high-risk, especially if the cancellation stemmed from non-payment or frequent claims. You may face higher premiums, limited coverage options, or denials. Working with an insurance broker or exploring high-risk insurance pools, like state FAIR plans, can help. For guidance, visit NerdWallet’s Home Insurance Guide.

What Happens to Your Mortgage?

If your homeowners insurance is canceled, your mortgage lender will require you to obtain new coverage immediately. Failure to do so may lead to force-placed insurance, a costly policy purchased by the lender to protect their investment. Force-placed insurance offers limited coverage (often excluding personal property or liability) and increases your mortgage payments. To avoid this, act quickly to secure a new policy. Check lender requirements at Fannie Mae.

Can You Reinstate a Canceled Policy?

Reinstating a canceled policy is possible in some cases, depending on the cancellation reason and insurer’s policies. For non-payment, paying the overdue balance promptly may allow reinstatement. However, cancellations due to underwriting issues, like excessive claims or property risks, often prevent reinstatement. Contact your insurer immediately to explore options. If reinstatement isn’t possible, start shopping for new coverage with providers like Allstate.

Steps to Take After Being Dropped

To restore coverage and minimize risks, follow these steps:

1. Contact Your Insurer: Understand the cancellation reason and explore reinstatement options.
2. Shop for New Coverage: Compare quotes from multiple insurers or work with a broker to find affordable policies.
3. Address Issues: Fix property maintenance problems or reduce risk factors (e.g., install security systems) to improve insurability.
4. Notify Your Lender: Inform your mortgage company about the cancellation and your efforts to secure new coverage to avoid force-placed insurance.
5. Consider High-Risk Plans: If standard insurers deny coverage, explore state FAIR plans or surplus lines insurance.

For more tips, see Bankrate’s Guide to Canceled Insurance.

How to Avoid Future Cancellations

Prevent future cancellations by:

• Paying Premiums on Time: Set up automatic payments or reminders for due dates.
• Maintaining Your Property: Regularly inspect and repair your home to meet insurer standards.
• Limiting Claims: Avoid filing small claims to maintain a favorable claims history.
• Reviewing Policy Terms: Understand your insurer’s requirements and risk factors, like pet ownership or location risks.

Compare policies from providers like Progressive to find stable, cost-effective coverage.

Having your home insurance dropped is a serious issue, but prompt action can mitigate the risks. By understanding why you were dropped, securing new coverage quickly, and taking steps to prevent future cancellations, you can protect your home and finances. Stay proactive to ensure continuous coverage and peace of mind.