Owning a home comes with a fair share of worries, not the least of which is that you may be concerned that your insurance operates like a “use and lose” policy.
Homeowners often worry that making a claim will cause the insurance company to drop them as fast as possible — and they may be right. Here’s what you need to know.
The difference between cancellation and nonrenewal
Your insurance company can’t cancel your policy outright under most circumstances. Some exceptions include:
- The insurance company learns that you lied about something (like the fact that your home is being used as a rental, not your primary residence).
- The insurance company performs an inspection and finds out that your home’s condition has declined since they first insured you.
- You’ve missed multiple policy payments (even if you eventually catch up).
- There is another material change that affects the insurance company’s willingness to insure your home, e.g., deciding to use it as a vacation property instead of your main residence.
Generally, even in these situations, your insurance company has to give you warning of their intentions if you’re accused of violating your contract with them.
Nonrenewal of your policy is a different issue. Your insurance policy is a contract that’s subject to annual renewal, and your insurer may suddenly decide that they don’t care to renew again.
Why? Most likely, they’ve decided that you’re too expensive to insure because you filed “too many claims.”
This can happen even if your claims were for low-dollar amounts, and due to nothing you could control (like hail or wind damage).
Fight for your rights against the insurance company
Insurance companies work hard to protect their bottom lines. They may not be as concerned about meeting their obligations to their customers. A delayed, devalued or denied claim can be the first sign of major trouble. If this happens to you, it may be time to speak to an attorney.