What to Do If Homeowners Insurance Is Canceled

If your home has a mortgage, your bank requires you to carry some type of homeowners insurance, and you don’t want it to lapse for any reason, says CFA’s Heller. If it does, the bank will step in and assign a type of policy (called “forced place”) that will cost you about twice as much as regular homeowners insurance, but that essentially protects only the bank in case of a loss of your home, according to the Consumer Financial Protection Bureau. 

If you don’t have a mortgage and live in an area where the policy options are few and very expensive for poor coverage, you may be tempted to go without insurance, as nearly 8 percent of homeowners in CR’s survey did. But that’s risky, too, says Heller. Instead, consider taking the following steps:

Confirm when the current policy expires and ask for a 30- or 60-day extension. Having more time will help you work through your options with your current insurer or shop around for new coverage without a pressing deadline. 

Although the insurer is not required to give you more time, it may offer a courtesy extension if asked, says Robin Nunn, a consumer advocacy attorney and partner at Nelson Mullins firm in Washington, D.C. To do this, ask to speak to a manager, until you get as high up as needed, Nunn says. “And if you missed the mailed notice because of a specific reason, such as a death in the family, be sure to mention that as well.” 

Gather evidence. Ask for a written explanation about why the insurer sent a non-renewal. For example, ask to see any aerial photos or video taken by drone or satellite that the insurer used to make its determination about a premium increase or cancellation, Nunn says. You’ll need these for the next step.

File an appeal right away. That worked for William Wilkin in Nashville, Tenn., he says, when his insurer said it would not renew his policy unless he repaired his roof. Wilkin’s insurance agent got hold of the satellite images the insurer used when issuing a non-renewal and was able to demonstrate that shadows from the trees made the roof (which is quite new) appear to be in disrepair. 

When combined with a roofer’s written inspection report and high-quality, close-up photographs of the roof submitted to the insurer with a letter, Wilkin was able to retain his insurance.

Act fast when asked to make repairs. When possible, make repairs without delay, Nunn says. That helped Joan Bobier in West Windsor, N.Y., retain her coverage after receiving a non-renewal letter just two weeks before her existing policy was to expire. “They said they were going to cancel my insurance because I had moss on the roof,” Bobier says. She was able to get help on short notice and was quickly able to send pictures of a clean roof and receipts. Bobier was able to keep her policy.

Don’t wait for your appeal to be determined before you shop for a new policy. “You’ll want to start shopping for new insurance at the same time you’re working on the appeal, because you may just have 30 days or less to find new coverage,” Nunn says.

Find a local, independent insurance agent or broker. Doing so can be more efficient than looking online for yourself, and they will be able to include smaller insurers that may operate only in your state or area. Not sure whether an agent is truly independent? Ask whether they act as a broker with multiple insurers or with just one or two companies. 

Can’t find a private plan? Look for a state-sponsored one. California, Florida, Hawaii, and New York, along with 29 other states and Washington, D.C., offer state-mandated plans for high-risk homeowners that are called Fair Access to Insurance (FAIR) plans. To see whether your state offers one, call your state’s insurance office. (The Insurance Information Institute lists contact details for all 50 states.) If you live in Florida or Louisiana, consider plans offered in those states called Citizen plans, which are not as bare bones as FAIR plans, Heller says. As state-mandated plans, these are more expensive and generally offer less coverage, Bell says, and because of that, are usually a plan of last resort.

These plans have such limited coverage and are really intended to provide catastrophic coverage, according to The National Association of Insurance Commissioners. So you may want to consider a second, more comprehensive policy to cover everything else, Heller says. These add-on policies are known as “wrap-around” coverage and can be purchased on the private market. Enlist the help of your broker to find one that works for you, Heller says.

As a last resort, shop for an E&S (excess & surplus) policy. If there are no FAIR plans in your state, or their coverage is too limited or too expensive, you could consider an E&S policy. These are not backed, reviewed, or regulated by the state you live in—and they can have all kinds of exclusions, restrictions, and limitations that you won’t find in a traditional home insurance policy, Heller says. He cautions homeowners to tread very carefully if considering coverage from these kinds of insurers.

However, E&S policies might cover more types of risks, provide more protection, and offer higher deductible options than what’s allowed with traditional homeowner insurance plans that are approved by your state.

If you go this route, stick with larger carriers, such as AIG or Lloyd’s of London, because they’re less likely to go bankrupt in the event of a disaster, Heller says. If a company goes belly up, you’ll have little legal recourse when trying to file a claim.