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Steps to Follow If Your Home Insurance Company Drops Your Policy

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Published on September 22, 2022. EST READ TIME: 3 minutes

Buying the house of your dreams is an aspiration that a lot of us share. There is absolute bliss when one moves into their house. At the same time, a house is without any doubt one of the bigger investments that you will ever make during a lifetime. Thus, it only makes sense to opt for a house insurance policy and protect your house from all possible contingencies.

However, merely buying a home insurancepolicy might not be sufficient. There are a few things that you need to keep in mind during the tenure of the policy. We will get that in a bit. Failing to follow them might put you at risk of being dropped by your home insurance company. Quite a few individuals find themselves being dropped by their home insurance providers.

Can Insurance Companies Drop You from the Policy?

When we talk about being dropped from the policy, there are two particular scenarios that come into the picture. Insurance providers can either choose to cancel the insurance policy or choose not to let you renew the same.

Cancellation of the policy refers to the insurance provider cancelling the coverage of the policy and not offering you any benefits during the term of the policy. On the other hand, non-renewal only takes place at the end of the policy tenure. In case of non-renewal, the insurance provider will not offer you the option to renew the policy.

Homeowners Insurance Cancellation

There are a few conditions where an insurance provider can choose to cancel your policy. Some common examples include:

• If a policyholder fails to pay the premium for the insurance

• If your insurance provider recommends or requests repairs to the house based on their inspection and you refuse to do so

• If a policyholder commits insurance fraud or has misrepresented information in their application form

Apart from the above, there can be some unusual circumstances, where the insurance provider might choose to cancel your policy while it is in effect. And some of these reasons might not have anything to do with you as a policyholder.

Though not common, a policy can be cancelled in the event that the insurance provider becomes insolvent during a financial year. Insolvency typically means that an insurance provider is under a lot of financial stress and cannot survive. There have been a few instances of companies becoming insolvent. In such cases, the regulatory body takes over the assets of the insurance provider.

Though the IRDAI has a lot of carefully measures steps to avoid the occurrence of such scenarios, it can never be ruled out completely. Should a company become insolvent and no longer can survive, there are two possible outcomes.

During such times, the role of IRDAI becomes even more significant. And the regulatory body decides if they want to transfer all the policies to another insurance provider or continue providing the coverage themselves. It is for this reason, that paying your policy premiums regularly becomes even more crucial.

Homeowners Insurance Non-Renewal

There are a few scenarios where your insurance provider might choose not to renew the home insurance policy at the end of the policy tenure. Though it is not a common occurrence, there are possibilities. And should your insurance provider decide not to renew your policy, they must give you advance notice for the same. It is the responsibility of the insurance provider to let you know about the decision well in advance. Here are some of the major reasons for the non-renewal of homeowners insurance.

• The policyholder has committed insurance fraud.

• If an insurance provider decides to remove itself from the home insurance market, purely due to business reasons.

• If the credit score of the policyholder drops considerably.

• If the insurance provider wants to reduce the total number of policies that it sells in a particular area. A good example is a lot of claims in the area due to natural disasters.

- A policyholder files for multiple claims during the tenure of the policy.

What Should You Do after Being Dropped by Insurance Provider?

In the event that an insurance provider is dropping you from the policy, they are required to inform you in advance. This duration is usually between 30 to 45 days before your policy expires. This advance notice gives you plenty of time to look for another house insurance policy.

The insurance provider is also liable to provide you with an explanation for ending the policy coverage. If they fail to do so, reach out to your insurance provider to ask them for an explanation or reason for the same. And if you do not agree with the reason that is being provided, you can take the matters up with the regulatory body.

For example, if the insurance provider says that your house is present in a high-risk location, that is prone to damage by severe weather. You can counter that by showing documents that your house is not present in a high-risk location or that you have taken adequate measures to mitigate the risks.

Start Looking for New Insurance Policies

Irrespective of whether you choose to contest the cancellation of a policy or its non-renewal, you must look for a home insurance policy. This is primarily to ensure that you have continued coverage for your home.

Since you are looking for a new policy, it might be a good idea to compare different homeowners insurance policies before buying one. Comparing policies will help you find an insurance provider that offers you all the coverage that you are looking for, without paying a hefty premium for the same.

And the best part about these comparisons is that you can do it free of cost. You can compare policies online and play around with different parameters to see how that impacts the policy premiums. And you can do all of this from the comfort of your home. Without ever having to discuss with any insurance advisor or talking with insurance providers.

Conclusion

Getting dropped off your home insurance policy can come in as a bit of a shock. In some cases, there are legitimate reasons for insurance providers to cancel policies. However, there are instances where these can be incorrect, and you can contest them. In such cases, it is always a good idea to look for a new home insurance policy. While looking for a new policy, you can choose to compare policies before buying. This will ensure that you purchase a policy that fits your budget and has adequate coverage.

Disclaimer: The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.

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