What to do if homeowners insurance is canceled

If your home has a mortgageyour bank requires you to get 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 issue a type of policy (called “forced placement”) that will cost you about twice as much as regular homeowners insurance, but essentially only protects the bank in the event of loss of your house. This was reported by the Consumer Financial Protection Bureau.

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

Confirm when the current policy expires and request a 30 or 60 day extension. If you have more time, you can review your options with your current insurer or seek new coverage without a pressing deadline.

Although the insurer doesn’t have to give you more time, it can offer a courtesy extension if requested, says Robin Nunn, a consumer advocacy attorney and partner at the Washington, DC, firm Nelson Mullins. To do this, ask to speak to a manager. until you get as high as you need to, says Nunn. “And if you missed the mailed notice due to a specific reason, such as a death in the family, make sure you mention that as well.”

Collect evidence. Ask for a written explanation as to why the insurer sent a non-renewal notice. For example, ask for any aerial photos or videos, taken with a drone or satellite, that the insurer used to make a decision on a premium increase or cancellation, says Nunn. You will need this for the next step.

Submit an objection immediately. That worked for William Wilkin in Nashville, Tenn., he says, when his insurer said he wouldn’t renew his policy unless he repaired his roof. Wilkin’s insurance agent had the satellite images the insurer used in issuing a non-renewal notice and was able to show that the shadows cast by the trees made the roof (which is fairly new) appear to be in disrepair.

Combined with a written inspection report from a roofer and high-quality close-up photos of the roof submitted with a letter to the insurer, Wilkin was able to keep his insurance.

Act quickly if you are asked to make repairs. If possible, make repairs without delay, Nunn says. That helped Joan Bobier in West Windsor, N.Y., keep her coverage after she received a non-renewal letter just two weeks before her existing policy was set to expire. “They said they were going to cancel my insurance because there was moss on the roof,” Bobier said. She was able to get help at short notice and was able to quickly send photos of a clean roof and receipts. Bobier was able to stick to her policy.

Do not wait until your objection has been determined before purchasing a new policy. “You want to start purchasing new insurance while you are working on the profession, because you may only have 30 days or less to find new coverage,” says Nunn.

Find a local, independent insurance agent or broker. This can be more efficient than searching online yourself, and they can include smaller insurers that may only operate in your state or region. Are you not sure whether a broker is really independent? Ask whether they act as a broker for multiple insurers or for just one or two companies.

Can’t find a private subscription? Look for a state-sponsored one. California, Florida, Hawaii and New York, along with 29 other states and Washington, DC, offer state-mandated plans for high-risk homeowners called Fair Access to Insurance (FAIR) plans. Call your state’s insurance office to see if your state offers one. (The Insurance Information Institute lists contact information for all 50 states.) If you live in Florida or Louisiana, consider plans offered in those states, called Citizen plans, which are not as simple as FAIR plans, Heller says. These state-mandated plans are more expensive and generally provide less coverage, Bell says, and are therefore usually a plan of last resort.

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

As a last resort, you can take out an E&S (excess & surplus) policy. If there are no FAIR plans in your country, or if coverage is too limited or too expensive, you may want to consider an E&S policy. These aren’t supported, rated 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 warns homeowners to be very careful when considering coverage with these types of insurers.

However, E&S policies can cover more types of risks, provide more protection, and offer higher deductible options than what is allowed with traditional homeowner insurance policies approved by your state.

If you go this route, stick with larger airlines, such as AIG or Lloyd’s of London, because they are less likely to go bankrupt in the event of a disaster, Heller says. If a company goes bankrupt, you have few legal options if you try to make a claim.