Home Insurance Cancelled? Here’s the Scoop.

C&S Insurance

woman with insurance questions looks confusedWas your Massachusetts home insurance cancelled or non-renewed? You’re not alone. Many people find themselves in this situation, after a series of claims or other insurance issues. Your first response is probably anger. Or frustration. After all, insurance is supposed to protect you when things go wrong, right? We get it. Here’s a great article on when/why insurance companies cancel or non-renew policies. You may identify with the people in some of these stories.

Meanwhile, rest assured that you do have options. And you should have some lead time. (By Massachusetts law, your insurance company must notify you 45 days before your policy is set to cancel.) If you’ve recently received a home insurance cancellation or non-renewal notice, here’s the scoop on how to handle it… and who to call for help.

Why was my home insurance cancelled?

There are a number of reasons why your insurance company may choose to either cancel your policy or render it non-renewable. Sometimes the reason is beyond your control. For regulatory or profitability reasons, your company may be non-renewing all policies your area. If this is the case, finding new coverage should not be a problem.

However, if your home insurance cancelled due to any of the reasons below, you may run into a bit more difficulty:

  • You didn’t pay your bill (on time)
  • You filed multiple claims in a relatively short time period
  • Your home inspection went badly (e.g. the company discovered an undisclosed trampoline or high-risk pets on the property)
  • You misrepresented something on your application
  • Your credit score declined (Did you know your credit score is part of your “insurance score?” Hits to your credit score may cause a spike in your premium or even a non-renewal.)
  • You were convicted of a crime

Your insurer should provide a reason for your cancellation or non-renewal when they notify you of the change. If they do not include a reason, or if you wish to dispute the reason, contact the company’s customer advocate department. If you’re still not satisfied, reach out to your state government’s Division of Insurance.

Will insurance cancellation affect my mortgage?

It could, if you don’t take care of the problem. Your mortgage company or bank will automatically receive a copy of the cancellation or non-renewal notice, as they are listed on your policy. By working quickly to replace the coverage, you can usually resolve the issue on your own. On the other hand, if you make no effort to address the lapse in coverage, your lender may buy replacement insurance on your behalf.

According to financial columnist Tim Plaehn, this insurance is referred to as lender-placed or force-placed insurance. “The forced-place insurance protects the lender’s interest in your home and keeps your mortgage agreement intact. The lender will include the cost of the lender-placed insurance in your escrow payments, so you pay for the coverage put in place by the lender.” Unfortunately, that rates for lender-placed insurance are often much higher and the coverage isn’t always comparable to what you had before (i.e. it might protect against damage to your home’s structure, but not your belongings inside), so it makes sense to shop around before things get to this point.

Can an independent agent help me fix a cancelled policy?

Yes, though it might not be the “fix” you’re hoping for. Depending on the reason you were cancelled/non-renewed, an independent agent may be able to place your home insurance with a different carrier. If not, an agent may guide you toward MPIUA. Here’s more info on the Massachusetts Property Insurance Underwriting Association (FAIR PLAN). Massachusetts’ FAIR Plan makes insurance coverage available to those who are struggling to find insurance for their home. You can contact the FAIR Plan at (617) 723-3800 or 1-800-392-6108.