What to do if You Lose Your Home Insurance
Article 8 in 12 on Home Insurance
What to do if You Lose Your Home Insurance
What if your homeowners insurance is canceled or is not being renewed? Under what circumstances could that happen? The information below covers some of those reasons, but the first thing you should do is know your rights.
If you lose your home insurance coverage or are rejected for homeowners insurance, you need to know your rights. You have the right to a written explanation of the reasons why you were denied, had your policy canceled, or you lose coverage.
The Comprehensive Loss Underwriting Exchange (CLUE) is often used to review an applicant's claim history. Remember, you do have the right to challenge incorrect information. You can get a copy of the CLUE report from the Choice Point Consumer Center at www.choicetrust.com
You will need the CLUE reference number from the company's denial letter. Having this number will help speed this process.
Cancellation and Non-Renewal
Non-renewal means a company has refused to renew your policy when it expires, but they must do so within 30 days of your policy's expiration date. If the company fails to notify you within that period, they must renew your policy at your request. You or your insurance company can cancel your policy before its normal expiration date. The company must refund what is known as the "unearned premium."
A company may not renew your policy if your property has deteriorated past a certain standard or if you file three or more non-weather related claims in three years. The company may require you to make repairs to your home before renewing your policy. Usually, insurance companies will give you up to six months to make the repairs. If the repairs are needed because of a storm or other covered loss, the company must pay for the work, minus your deductible. If the repairs are need due to normal wear and tear of deterioration, you are responsible for paying for them.
Thirty days notice is required if your policy is canceled within the first 60 days. The company can only cancel within the first 60 days if it identifies an undisclosed additional risk of loss that is not the subject of a prior claim or if it discovers fraud, increased risk, or nonpayment of a premium.
If you move out of your home and it is vacant for 60 days or longer, most policies are automatically suspended and will not cover you for damages to your house. The policy's liability protection continues. The vacancy could cause your insurance company to refuse to renew the policy when it expires.
Exceptions
A company cannot refuse to renew your policy because of a third claim, but only if it failed to notify you after a second non-weather related claim. However, a company can apply an added premium, called a surcharge, for filing two or more non-weather-related claims in the previous policy year, instead of non-renewal.
Your Rights Against Unfair Discrimination
An insurance company cannot deny, refuse to renew, limit, or charge more for insurance coverage due to race, color, religion, national origin, age, gender, marital status, geographic location, or disability unless this denial is based on "sound underwriting or actuarial principles." This would mean that the homeowners insurance company would have to show valid statistical evidence that your home presents a greater risk for loss than another home it is willing to insure.
An insurance company cannot discriminate against homeowners of the same rate class and with essentially the same risk in its rates, policy terms, and benefits, or in any other manner unless, once again, the refusal, limitation, or higher rate is based on "sound actuarial principles."
An insurance company cannot refuse to insure your home based solely on its age or low value. It can require updates to the wiring, plumbing, and heating systems before insuring an older home. The company can, however, offer discounts to newer homes.
If you are financing your home, your insurance company may require your lender to sign or approve your claim. When this happens, the lender must act within 10 business days after receiving the request. Failure to act within this period could result in a $500 civil penalty. If you have complaints about your lender failing to process claims, you should direct them to your state's Attorney General's Office.
Your homeowners insurance will pay to repair or replace the damaged property with materials that are similar in kind and quality to the original. Basically, your insurance company is responsible for returning the property to a state similar to the way it was before the damage occurred. The choice of repair firms is yours. If your home was adequately insured, you won't have to settle for anything than you had before the disaster.
Your insurance company only makes payments for stolen or damaged goods when your claim exceeds your deductible.
