Homeowners insurance companies routinely review policies to decide whether to renew or cancel them. There are some red flags that insurance companies do not like to see and may make your insurer decide to cancel your policy.
Too Many Claims
Your insurance company might cancel your policy if you have filed several claims in a short period of time and the company paid out more than it collected in premiums. If the claims were related to a single common problem, you might be able to persuade the company to keep you as a customer if you have made changes or repairs to address the underlying issue and prevent future claims. The company might also be willing switch you to a policy that excludes that specific peril or that has a higher deductible.
If you put off maintenance for so long that your house is dangerous, the insurance company might be unwilling to cover you. The risk of damage to the house, its contents and people could simply be too great for the company to accept, unless you offered to make major repairs to make the house safe.
Change in Risk
Perhaps you have made a change to your property that increases the risk of an accident. For example, if you installed a swimming pool, a child could drown, which could result in a liability claim against the insurance company. The company might be willing to continue to insure your home if you installed a fence with a locked gate and alarm around the pool. For more about the concept of attractive nuisance and insurance companies, you can check out my blog post from earlier this month.
If you haven’t paid your premiums on time, the insurance company might decide to cancel your policy. If you lost your job or had an unforeseen medical problem that left you unable to work, the insurer might be willing to work out a payment plan and keep you as a customer.
An insurance company also considers the behavior of policyholders. If you have a criminal record, the company might be concerned about damage or liability related to future illegal acts that you might commit on the property. If you caused intentional damage to your home to file an insurance claim and got caught, the company could cancel your policy.
Sometimes an insurance company makes individual policy decisions by looking at characteristics of a wider area. For example, if your home and others in the neighborhood were burglarized recently, the insurance company might consider the entire area too risky to insure. It might be willing to keep you as a customer, however, if you installed a home security system.
Talk to Your Insurer
If your homeowners insurance company has notified you that your policy will be canceled, call and discuss the reason for the impending cancellation and find out if there’s anything you can do to change the company’s decision. If not, you’ll need to start looking for coverage with another company before your current policy ends.
If you are looking for a home in the DC metro area, you know there is more to the process than just picking a property and making an offer. You need to find the best location for your wants and needs, get a great price, and work with a lender who will make your life easier - not harder. Trust your search with a Realtor who is licensed in DC, MD and VA and really knows the city and all its secret neighborhoods.
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