Do you find yourself in a situation that your current insurance company has dropped your home policy? This is a common situation, and understanding your rights as a customer will help you to avoid it.
A dropped homeowners' insurance policy, also called cancellation or nonrenewal coverage, can create a stressful situation. This can be a very stressful situation, but you don't have too. Here are four easy steps that will help you to get your life back on track.
What are your rights as a policyholder?
You have the right to receive a written notice at least 30 days before your policy is cancelled or non-renewed. You have time to find a new insurance company and avoid a gap of coverage.
If you do not receive a notice in writing from your home insurer, you may file a formal complaint with the insurance regulator of your state. The regulator will examine your complaint and determine if further action is needed.
Your insurance cancellation rights
Insurance companies can cancel homeowner policies after 60 days if the customer has not paid their premiums, or committed fraud. A policy can be cancelled if an insurer determines that the customer's home poses a risk unacceptable, for example if there has been a fire or theft.
A change in the condition or value of the property is another reason to drop a policy. Insurance costs will be higher for a home damaged in a fire than a vacation rental that is unoccupied.
You should also check your credit rating before purchasing a homeowners insurance policy. A low credit score can make it harder to get a mortgage, and insurance companies may see you as a higher risk.
Your home insurance can be cancelled if there are too many gaps in your coverage. A lapse is when you stop paying your insurance premiums. Most companies have grace periods that allow policyholders to catch up and reinstate their coverage.
A change in the level of risk for your home or multiple claims are also reasons why you may lose home insurance. Your home's risk rating can be changed if you have made many claims or if your house has been dangerously neglected.
Your rights as a policyholder
You may find it difficult to obtain new insurance after your policy has expired, particularly if you have bad credit or any other issues. A financial advisor can help you choose coverage that meets your needs while staying within your budget.
There are online brokers who can compare options and rates if you do not have an agent. These brokers are usually specialists in multiple insurance companies, and can help you determine which one is best for your particular risk profile.