5 Reasons Your Homeowner's Insurance May Drop You — and What To Do If They Do
An insurance company can cancel or decline to renew a homeowner’s insurance policy for a long list of reasons. This could be for non-payment, changes in the risk level in your area and more.
When this happens, the company should inform you of the reason for the cancellation or non-renewal and give you enough time to find a new policy within one to three months of this date, according to the Consumer Financial Protection Bureau (CFPB). However, laws vary by state.
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Here are five reasons why your homeowner’s insurance may drop you, and what to do.
1. You Stopped Paying Premiums
It depends on the state and insurer, but if you stop paying premiums, the insurer could cancel your policy fairly quickly for non-payment.
“That’s pretty much a guaranteed way to get dropped. No one is going to cover your risks when you don’t pay them to do so,” said Melanie Musson, home insurance expert with Quote.com.
The best way to avoid this is to pay your premium on time. This is typically an issue if you pay your premium directly to the insurer. Homeowners can also pay their homeowners insurance through their mortgage escrow account.
2. You Didn’t Make the Required Improvements
To mitigate risk, insurers may ask homeowners to make upgrades or repairs in order to renew their policies.
“They have to notify you and give you time to make the improvements. Those specifics will vary by state, but typically, they will need to notify you several times and give you about three months to address the issues,” Musson explained. “For example, they may require that you get a new roof or update your electrical system if your house is older.”
You may be able to keep your coverage if you make the required improvements in time and send proof to the insurer. If you disagree or if the requested repairs are too expensive, you can ask the insurer to reconsider, get several estimates from contractors or shop for quotes from other insurance companies.
3. You Have a Trampoline
If you have a trampoline in your yard, some insurers may not want to renew your policy.
“More and more insurance companies are refusing to provide coverage to homeowners with trampolines,” Musson said. “They will notify you and give you until a set date to remove a trampoline. If you don’t, they can drop you.”
4. You Filed Too Many Claims
According to Musson, you may get dropped for filing too many claims.
“The more claims you file, the higher your risk level is to an insurance company,” she explained. “At some point, they will decide your risk is too high and drop you. They must notify you first.”
Even if you haven’t filed too many claims, your insurance company could have a problem with a specific claim and choose to no longer offer coverage. Lynn Swink, director of personal lines at Palomar Insurance, pointed out that an adjuster might uncover the same underwriting concerns previously mentioned or the cause of the loss wasn’t corrected, and choose to drop coverage.
“While not every claim is preventable, tools like leak‑detection systems and monitored alarms can help. And it’s important to remember that insurance is meant for major losses, not routine maintenance,” Swink advised. “A higher deductible can also help you avoid filing small claims that may hurt you later.”
5. You Have a Policy Mismatch
If you leave the property vacant for long periods of time, the insurance company could decide to end your policy.
“When a property is not inhabited, the risks increase,” Musson wrote. “Not only does the risk of being broken into increase, but the risk of small problems escalating into big problems also increases because no one is there to catch them.”
In addition to vacancy, if the home’s use doesn’t match the policy, like if the home is under renovation for an extended time, rented out or being used for business, it could also cause problems, according to Swink.
“The best way to avoid surprises is full transparency,” Swink explained. “Review your application carefully, and don’t hesitate to send your agent photos of the property so potential issues can be addressed before the inspection.”
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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