As of February 2021, 65.8 percent of people own their homes. When owning a home, you need homeowners insurance to go with it. However, sometimes the insurance company will drop the policy after an inspection. What would cause the homeowner’s insurance to be canceled after the inspection? Well, finding potential fire hazards and other structures in disrepair, filing too many claims, not paying the premium, living in a high-risk area, roof issues, pets, and bad credit. Let’s take a look at these factors and help you avoid cancellation. If you are canceled, there are options.
Why You Need to Know About Homeowners Insurance Canceled After Inspection
Homeowners insurance is important to have in case of destruction of the home or other less severe issues. Sometimes, an insurance company may cancel a policy because of the issues listed above. Some states like Florida have seen insurance companies completely pull out of a state due to tropical storms.
Potential Fire Hazards or Structure Issues Found and Homeowners Insurance Canceled After Inspection
When a homeowner’s insurance policy is up for renewal, the company may go out and inspect the property. If there are fire hazard issues or they notice broken pipes or a major structural issue or a chimney is missing, or the roof is not intact, etc.
Filing Multiple Claims Can Cause Homeowners Insurance to be Canceled After Inspection
Sometimes there are minor things that happen in a home such as a window is broken after a storm. We may think it is a good idea to file a claim. However, in that example, it will be cheaper for the homeowner to replace the window and not notify the insurance company.
Why? You have a deductible to pay and the window probably costs less than the deductible so you are better off replacing it on your own. Filing multiple claims is a red flag for insurance companies- even in the area of car insurance. Also, if you file a claim and the insurance company becomes aware of other issues in the home that need fixing, they can cancel you if you don’t fix them.
Not Paying the Premium
Our escrow usually pays our homeowner’s insurance policy but sometimes there may not be enough in there to pay it so we need to come up with more money. Instead of not paying it and ignoring it, contact the insurance company and let them know. Maybe they can work out a plan for you. If you don’t have a mortgage, you want to make sure you have enough money to pay for it each year.
Not Making Repairs Can Be a Reason Your Homeowners Insurance is Canceled After Inspection
Maybe when you filled out the application with the homeowner insurance company, there were repairs mentioned that you had to make and did not follow through. This can cause you to be canceled. Also if it is pointed out during an inspection by the insurance company that there are repairs to make and you don’t make them, then they can cancel you. You now are considered high risk.
Living in a High-Risk Area
If your home is in a coastal area that is prone to hurricanes or areas that are prone to tornados or natural disasters, you may find that your insurance policy is canceled. If it happens to be an active year with storms and a lot of insurance claims from the area or state, home insurance companies may raise the premium or cancel the policy.
In the south, these seem to be major issues because of the storms and other natural disasters. States that have a lot of snow may see these issues as well. Even if it is not weather related, if your roof is close to 20 years old, the homeowners insurance company might not replace it since it is older in years and 30 is usually the maximum life.
Also, as roofs age, they start to have more issues. It will also depend on the type of roof you have. A roof that is not fixed can be a reason your homeowners insurance is canceled after inspection.
Roof Certification Inspections (in Florida)
In Florida, Roof Certification Inspections are required by homeowners insurance companies as the roof gets closer to the end of its time. It requires a Florida certified home inspector to survey the roof and report how many years are left on its life. This information is then given to the insurance company.
Normally, if there are 3 years or less, the insurance company may require you to replace it. This is because, past that, there is a good chance the roof won’t survive many hurricanes after the 3 years. In fact, most insurance companies want you to have 5 years remaining on the roof. If a request is made to have the roof replaced and it is not, the company can drop the insurance coverage.
Since September of 2018, this is required for older homes that are 30 years old or older in Florida and many states. However, some insurance companies have required younger homes to have a 4-point inspection as well. This inspection covers the areas of HVAC, electrical, plumbing, roof, and structure.
Four-point inspection also requires the certified home inspector to determine how many years are left on the roof. Three to 5 years is good and less than that replacing needs to be done. Unfortunately with the Roof certification inspection and 4-point inspection, many homeowners in Florida find out it is time for replacement and can be dropped from coverage if they don’t replace it.
Some states have rules about certain pets they won’t insure. It can be specific breeds of dogs or it can be animals like boa constrictors or other exotic pets. Check with your homeowners insurance company before you buy a pet to see if there are any problems with insurance. It may not seem fair, but usually, a law was made because others were not careful. Here is a list of some of the dog breed’s
If you have bad credit, it could be a factor of whether an insurance company would cover you. Also, it can affect how much you pay and how you pay. The amount might be out of your price range and you will need to speak to the company about working out a plan.
Suggestions for Repairs Made by the Insurance Company
If the insurance company makes suggestions for repairs, you can ask if they are suggestive or mandatory. Also, if you don’t agree with a mandatory repair, get a second opinion from a licensed professional.
Electricity or Wiring Suggestions
If it is found that you need an updated electrical box, you can get a second opinion from an electrician. There are some electrical boxes that have FPE panels that insurance companies won’t insure. Also, there are problems with knob and tube wiring that make a home a hazard. Electricity and wiring are things you don’t want to mess with.
Trampoline or Swimming Pool Can Cause Homeowners Insurance Canceled After Inspection
Adding these to a home can cause the insurance company to drop your policy. This is because they are high-risk activities. Before adding either one, reach out to the company to see if you need additional insurance added or a clause to the policy.
Vacant Building or Residence
If you have a home that you only use a few weeks a year or one season a year, you can be dropped for the home being vacant. This is because it invites issues with crime and also pests. Letting a company know you will be in another home most of the year will allow them to add this to the policy, but you may end up paying more.
Here are some other reasons you may be dropped:
Letter in Writing of Cancelation
Most states require a letter in writing from the insurance company 30 -45 days in advance of canceling the policy. The letter should state the reasons and who to contact with questions.
If You Are Canceled, What Next
It depends on why your policy was canceled. If it was because of the inspector finding that the home had fire or structural issues, often you have a specific amount of time to have these issues fixed. Pet issue or didn’t pay? Talk to the company about how you plan to resolve it.
If it is because you live in a high-risk area, there is usually not much you can do. There is a grace period in which you have time to find coverage with another company. However, if you are canceled because of fraud, then you have to pay for any issues out of pocket.
High-Risk Home Insurance
There is help for people who are considered high risk. You can call your state’s department of insurance to get a list of carriers in your area. Here in Florida, this is the link. There are also FAIR Plans, or Fair Access to Insurance Requirements Plans and you can get coverage but pay higher premiums. Here is more information.
Lender Placed insurance is one where the lender takes over the insurance for your home. However, it does not usually cover personal property or living expenses if you lose your home.
What the Homeowner Can Do
Maintenance around the home– make sure everything looks good and is functioning properly in the home so a company doesn’t have a reason to not insure you.
Claims– don’t file claims for every little thing that happens. This will raise your rates and possibly put you on the non-renewal list. File claims for major issues like loss of the side of the home or roof has a lot of damage. As mentioned above, figure out the cost of repayments of something and what insurance covers versus the insurance deductible and the possibility of the rate increasing. Then. make the best plan of action.
Follow rules and requirements– following the rules and requirements of the insurance company will help you in staying renewable. If you happen to bundle your homeowner’s insurance with auto insurance or life insurance, be careful because if you get dropped from one, you may be dropped from all as well.
When to Call a Professional
If the company says you need replacement of specific issues on the home or you don’t agree with the requirements, call a professional to do an inspection for you and send the written quote to the company.
Cancellation of a homeowner’s policy can be because of many things. Having an understanding from the beginning of the requirements and making good on any promises you make are important. We can inspect your appliances, roof, and structural issues during our home inspections in Central Florida: Clermont, Orlando, and the Villages.
Question about issues in an inspection by the homeowners insurance company or in need of our services? Comment below.