Have you received a non-renewal or cancellation from your homeowner’s insurance company? Why would they do this to you? More importantly, what do you do now? Most people don’t give a lot of thought to their homeowner’s insurance policy – until they’re faced with the threat of losing it. Insurance companies will cancel or non-renew a policy for a few different reasons, some of which are out of your control. But first – what is the difference between a cancellation and a non-renewal?
If your policy is being cancelled, it is usually due to one of two things: Non-payment of premium or fraudulent information on your application. It is very rare for us to see fraudulent misrepresentation, so let’s focus on non-payment. Many people have an “impound account” with their mortgage company. When you make your monthly mortgage payment, the property taxes and homeowner’s insurance payment are included. Every year at renewal, your mortgage company pays your insurance premium for you. If you have an impound account and you receive a cancellation notice from your insurance company, it means your mortgage company has not paid your premium. You need to call them right away to find out why. You should also call your insurance agent – he/she can be instrumental in getting the problem resolved.
If you do not have an impound account, you are responsible for paying your homeowner’s insurance either annually or on a payment plan. We cannot stress enough the importance of paying your premium on time. Not only can you incur costly late fees, if your policy cancels for non-payment of premium, there is no guarantee the insurance company will reinstate it. That will cause you to go shopping for a new insurance company – which brings us to the difficulty of obtaining insurance in some parts of Shasta County.
As we’ve all seen over recent years, we spend a lot of time on fire up here. California insurance companies have become much more cautious about writing property policies in rural, inaccessible, brush-heavy or sloping terrain. The risk of fire is simply too great. This brings us to the subject of non-renewals.
When an insurance company non-renews a policy, it means your coverage will cease at the end of your policy year. The company will not offer to renew your policy. One of the reasons is that the company no longer wants to write coverage in your area. This may mean a company simply stops offering to sell property policies in all of California.
A policy may be non-renewed because of higher risk due to claims. Homeowner’s insurance policies are not meant to be home maintenance policies. The coverage is designed to help with sudden and unexpected large losses. If you choose to submit every loss you suffer, your policy may no longer fit within the guidelines of the company as a qualified risk. In this case, they may not offer to renew your policy. Some ways to avoid having your policy non-renewed due to claims history:
- Don’t submit small claims that may add up and work against you
- Consider a higher deductible. This will save money on your annual premium and keep you from filing those small claims
- Do routine home maintenance check-ups. Water losses are a large percentage of claims and can be very costly to remedy. Check hoses on washing machines, dishwashers and ice makers. These are the main culprits of a water loss. Consider turning off your water if you will be on vacation for a period of time.
Lastly, your policy may be non-renewed because your agent no longer represents that insurance company. Companies and agents may opt to terminate their mutual agreement. If that happens, the customer will receive a non-renewal with the reason “your agent no longer represents the company.” If you like the insurance company you were with and want to keep them, simply find another agent who represents that company. Rewriting your policy can usually be accomplished by a new agent.
If you find yourself without an insurance company (or agent) due to a non-renewal, please consider giving us a call at the CIG Shasta County Insurance Center. Capital Insurance Group is writing business in and around Redding and we would be happy to take over as your agent! Give us a call at (530)223-5625 or stop by our office in the Town & Country Shopping Center on Hilltop Drive.