If you have a mortgage on your home, your lender typically requires you to have homeowners insurance. Even if your lender doesn’t require it, most people consider homeowners insurance to be a smart way to protect themselves.
But did you know your insurance company could cancel your policy altogether? Here are 10 reasons an insurance company could give you the boot.
If your home is in an area prone to natural disasters, it raises a red flag for your insurance company. And if you’ve filed a claim due to damage from a natural disaster, such as a hurricane or wildfire, that could raise your rate or even lead to cancellation.
Before you buy a house, talk to a few insurance companies about how their rates are impacted based on the likelihood of things like tornadoes, hurricanes, and earthquakes. Flooding also may be a big concern, so find out if your home is in a flood zone and if you may need extra insurance coverage.
Pro tip: To learn more about your options, check out our list of the best home insurance companies.
You should use your homeowners insurance if you need it due to damage or other issues, but filing claim after claim may concern your insurance provider. This is a common homeowners insurance mistake.
On average, homeowners may file a claim about once a decade, so if you’ve had to file with your insurer once a year, you may want to prepare yourself in case your provider decides not to renew your policy.
Backyard pools and trampolines
Adding a pool or trampoline to your backyard might add fun for your family, but it adds risk for your insurance company. These types of additions are known for injuries like broken bones or accidental drownings. Because of this, insurance companies may up your premium or even cancel your policy.
Before you add something like this to your backyard, check with your homeowners insurance provider to see how much it would cost to cover that addition or if you can include them on your policy. You may also want to ask about the cost of an umbrella policy to cover any kinds of injuries due to a pool or trampoline.
Bad credit score
An insurance credit score can be used by providers to determine whether to insure you and at what rate. An insurance credit score is slightly different from your regular credit score, but generally it is based on similar factors, such as your credit history, payment history, and any debt you may be carrying.
If your credit score goes down for some reason, check with your provider to see how that may affect your policy. If you’ve bundled your car and home policies to save money on car insurance, a decline in your credit score may also affect that policy.
As more employees are working remotely, operating a business out of your home may become a factor for your insurance coverage. Check with your insurance provider if you’ve decided to run your own business out of your home to see what is and isn’t covered or how to get coverage for your business. If you’re upfront with your insurance company about a new endeavor, they can work with you to find the best insurance for both your home and business.
Not maintaining your home
Poor maintenance can lead to claims for damage to your home for any number of reasons. Insurance companies could cancel your policy if they find that you haven’t properly maintained your property.
In particular, think about areas in your home that could incur major costs if they aren’t maintained properly, such as your furnace and air conditioner or water pipes. You’ll also want to replace your roof about every 20 years, which can protect your home from leaks or possible wood rot.
Take a look at crime rates in your area before deciding to buy a home or trying to renew your homeowners policy. An increase in crime may be a bad sign for insurance companies. In particular, consider crimes that could lead to loss or theft, which may require you to file a claim with your insurance provider.
Insurance providers consider criminal records of a home’s occupants when deciding whether to cover a property. Be honest with your insurance company about any convicted felons who may be living in your home. This could affect whether or not a provider will cover you or if they will charge you a higher premium. In this case, it may be better to be upfront with any providers before issuing the policy instead of having them find out later, which could lead to your policy being canceled.
Your pet is part of your family, but your insurance company may care what kind of dog you have. There are certain dog breeds that insurance companies may not be willing to cover, such as pit bulls, Doberman pinschers, or rottweilers. Companies may be concerned about covering claims if a dog bites someone or injures someone by jumping on them.
If you plan to add a dog to your family, check with your insurance provider to see if they have limitations on which breeds they may cover or if they will charge you higher premiums for coverage.
Vacancies in the neighborhood
A nearby vacant property could lead to any number of additional problems when it comes to filing a claim. Empty homes may be more susceptible to break-ins or other criminal behavior. If a home is vacant, there also isn’t anyone there to keep an eye on possible problems, such as water leaks, fire, or other damage that would need immediate attention.
Your home is an investment that you want to make sure is protected in case of damage, theft, or other issues. But remember that insurance companies can cancel or not renew your policy if they determine you may be a liability for them.
Keep in mind factors such as maintenance, alterations to your property, or other issues when determining if you can get coverage for your home or what kind of changes you may want to make to it.
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