How to Cancel Your Homeowners Insurance Policy

Table of Content

• The Bankrate promise
• Reasons Your Homeowners Insurance May Get Canceled
• How Long Does It Take for Homeowner's Insurance to Go Into Effect?
• If Your Homeowners Policy is Non-Renewed
• Homeowners Insurance Basics
• Flood insurance facts
• How to buy flood insurance coverage
• Living in a Location With a High Rate of Crime

Your lender sets up an escrow account to pay your taxes and insurance along with your mortgage payments every year so you don’t have to set money aside for the different dues monthly or quarterly. Your company may have decided to drop a particular line of insurance or to write fewer policies where you live, so you shouldn't necessarily think the non-renewal is because of something you did. On the other hand, if you did do something that raised the insurance company's risk considerably, like committing fraud, your policy may not be renewed. Either you or your insurance company can decide not to renew the policy when it expires. In New York, an insurance company must give you 45 – 60 days notice and explain the reason for non-renewal before it drops your policy.

So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information. SmartFinancial Insurance is a digital insurance comparison engine, providing real-time rates and insurance services in all 50 states through its relationships with carrier and agency partners. If maintaining coverage with your previous insurer is impossible, you will need to find a new insurance company. The following steps show that finding a new policy is a similar process to buying your first policy.

The Bankrate promise

The state protects home insurance customers after they have a claim for damage to their home by forbidding insurers from canceling coverage at renewal time if the home has yet to be completely rebuilt. Similarly, insurers must renew policies at least one time after a home suffers a total loss if the damage was caused by a natural disaster and not a result of customer negligence. Your state may have specific cancellation laws that affect your rights in a given claim situation. If the policy lapses for any reason, the mortgage lender will find an insurer to cover the home on behalf of the policyholder.

They’ll likely send you a form to specify the details of your cancellation. Canceling homeowners insurance can be as simple as contacting your insurance provider and filling out a brief cancellation form. But before making it official, make sure you have another policy lined up so you aren’t leaving yourself without coverage for any period of time.

Reasons Your Homeowners Insurance May Get Canceled

When you cancel your policy, you often receive a refund for the unused premiums if you paid in full in advance. When you receive a homeowners insurance premium refund, it’s wise to contact both the insurance company that sent it and your lender to make sure the money gets used how it should. And, don’t forget that when you change home insurance carriers, you need to notify your mortgage company. You have the right to a refund of a portion of the premium if you cancel your homeowner's insurance. The type of refund you receive depends on the terms specified in the cancellation portion of your policy. A short rate calculation method is normally used if the homeowner cancels the coverage, and the company retains a percentage of your premium to offset administrative costs.

However, the older your roof is, the more risk your insurance company must deal with. Insurers might cancel your policy and need a new roof to reinstate it if your roof fails a renewal inspection. Talking to your insurance provider or agent is a recommended first step if you receive a cancellation letter. Depending on the inspection results, you may be allowed to repair or replace your deteriorating roof if your homeowners' insurance is canceled. There's a chance that the firm will reverse the decision and reinstate your coverage. So, when you cancel your homeowners insurance when you move, you’re usually eligible for a refund of some of the premiums you paid since you’re not using the policy for its full life.

How Long Does It Take for Homeowner's Insurance to Go Into Effect?

If the insurance company cancels your policy, the pro rata method of calculation must be used to determine your refund amount. On the other hand, learning that your homeowners insurance policy was canceled or nonrenewed can be stressful and frustrating. But the reality is that it can happen, and you need to know why and how to resolve the issue if it does. Bankrate.com is an independent, advertising-supported publisher and comparison service.

While this alone may not exclude you from receiving coverage, it can have an impact on the cost of your premiums. The insurance provider might cancel your policy if they weren't made aware of your exotic pet's existence when it was provided coverage if it bites or damages your neighbor's property. Full disclosure is essential, and withholding information from your insurance provider could give them a legitimate excuse to terminate your policy. If the insurance company's underwriter inspects your property and discovers an unacceptable risk, they may terminate your existing policy when it comes up for renewal.

If Your Homeowners Policy is Non-Renewed

Bankrate follows a strict editorial policy, so you can trust that we’re putting your interests first. An insurance company also might not renew your policy if you file just a few large claims due to damage you cause, even if the damage was unintentional. You can have candles, but if you frequently forget to extinguish them and have caused two serious fires, a company might not renew your policy. According to Rocky Mountain Insurance Association, a non-profit insurance communications organization, homeowners insurance was meant to cover unexpected and large losses, not maintenance. Treating your policy like the latter may lead to excessive petty claims that could flag you as a high-risk homeowner. You shouldn’t cancel your policy when you’re moving until after someone has closed on your house.

If you receive a non-renewal notice, the first thing to do is to learn why your policy is being canceled. If you don't get an explanation in the mail, you may always call your carrier or agent and ask them for more information. You may be able to persuade the insurance company to preserve your coverage by making adjustments to your house or policy, depending on the circumstances. Well, if you receive a refund check from your homeowners insurance company, you may need to delay your celebrations. The check should ultimately end up going back, at least in part, towards insurance payments, which, unfortunately, is more practical than it is joyous. If you are buying an existing home, find out what claims have been filed in recent years.

For example, say a carrier insures a home then a policyholder makes some type of drastic change to the structure. If the changes make the home uninsurable, based on the company's own determination, they will cancel the policy. Another possible reason for an insurer to cancel a policy is if the condition of the home deteriorates, causing more risk than what an insurer is willing to cover. Bankrate’s full guide to the different types of homeowners insurance. For a very simplified example, let’s say you paid $1,500 for 12 months of home insurance coverage, which is $125 per month. You’d potentially be in line for a $375 refund for the unused three months of your policy.

Hearst Newspapers participates in various affiliate marketing programs, which means we may get paid commissions on editorially chosen products purchased through our links to retailer sites. This will be helpful for setting a cancellation date on your current policy. This article has been reviewed by a licensed Policygenius expert to ensure that sources, statistics, and claims meet our standard for accurate and unbiased advice. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Failure to find home insurance after getting dropped can result in your lender buying an expensive policy on your behalf.

And some may only apply a fee if you cancel within the first two months of your policy. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy.

Your insurance company may require a home inspection when you first buy the policy and before deciding to renew your contract. Home inspections are not always required before renewing the policy but can be more likely if you live in an older home or your home hasn’t been inspected for several years. Home insurance cancellation rights can vary by state but generally, your insurance company will need to provide you notice before ending your coverage. Most insurance companies now require a credit check before giving coverage.

How to buy flood insurance coverage

Most major insurance companies prorate refunds, meaning you can cancel at any time and get reimbursed for any unused policy premiums. But on the rare occasion, smaller mutual insurance companies may charge a financial penalty called a short rate cancellation if you cancel your policy before the policy’s expiration date. In the United States, insurance customers generally have the right to cancel their policies at any time for any reason. If you paid your premiums in advance, your insurer will refund any unearned premiums, meaning the money you paid for coverage for the time after the cancellation date.