Navigating Uncertainty: A Guide to Home Insurance Policy Non-Renewal

In recent times, an increasing number of Americans are facing a harsh reality: their home-insurance provider is not renewing their coverage. Damage from extreme weather events, a surge in lawsuits, and the escalating costs of rebuilding have compelled many leading insurance companies to halt the renewal of existing policies and stop issuing new ones. Homeowners in states like Florida, Louisiana, and California are especially affected, but the problem is rapidly spreading nationwide.

The cost of coverage is also skyrocketing as insurance companies grapple with an uptick in claim payouts. As per Bankrate, the national average for home insurance with $250,000 in dwelling coverage has seen a 20% increase, bringing the yearly cost to $1,428. This rise further emphasizes the necessity of having a plan in place should your home insurance policy not be renewed.

The Necessity of Home Insurance

Financial advisors and loan experts agree: living without home insurance is a risk that homeowners should not take. A standard policy usually covers the cost of replacing the home and some of its contents in the event of damage or theft. Moreover, most mortgage lenders require borrowers to have home insurance. Without insurance, a disaster like a fire could not only result in the loss of your house and its contents, but also leave you burdened with the cost of debris removal and reconstruction.

Be Proactive

If you foresee a risk of being dropped by your insurer, act swiftly. Reduce the risks to your home and begin researching alternative insurance plans.

Making Your Home More Insurable

Take steps to make your home less risky to insure, which could increase your chances of having your policy renewed or even landing a discount. Installing fire alarms, a security system, or smart technology safety devices like leak-detection sensors and smart thermostats can make your home more insurable and potentially reduce your premium by 1% to 5%.

Consider making the exterior of your home more disaster-resilient. For example, if you live in a wildfire-prone area, clear vegetation to create a defensible space around your house. Updating your roof, installing hurricane shutters, or adding fire-resistant siding could also tip the balance in favor of your policy being renewed.

Don’t Wait

If you’ve received a nonrenewal notice, ask your agent why and see if it’s possible to get the insurer to reconsider. Don’t hesitate to let others know about your situation; their advice or connections could help you find a solution, as was the case with Josh C. Kline, who found a new insurer through his neighbors when his coverage was not renewed due to wildfire threats.

Research Less-Known Insurers

While some of the well-known insurance companies are reducing their coverage, some homeowners are finding alternatives with lesser-known insurers. Reach out to your state’s insurance department to determine which companies are still issuing policies in your area. However, beware of “ghost brokers” who pose as insurance agents and take money for nonexistent insurance policies.

Before providing your private information to a company or broker, request their National Association of Insurance Commissioners (NAIC) number and verify it with the state. You can also check the company’s reported complaint history with the NAIC through their consumer insurance search tool.

To ensure your chosen insurance company will be able to pay any claims you may need to file, look up the insurer’s rating with an agency such as AM Best, which specializes in providing financial strength ratings for insurance companies. Checking how long the insurer has been in business can also provide an indication of its stability.

Check With Your State

If you’re unable to secure private insurance, you may need to look to your state. FAIR plans, or Fair Access to Insurance Requirements plans, provide coverage to individuals who are unable to obtain insurance in the regular market. These state-mandated property-insurance plans exist in all U.S. states, although their specifics vary by state. While FAIR plans are typically more expensive and may have more narrowly defined coverage than plans purchased through private insurers, they offer an important alternative for those struggling to find coverage.

Conclusion