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It’s a shock if you’ve been notified that your home insurance company is dropping you, as thousands of Florida policyholders have recently. Fortunately, options are available to ensure that your home remains insured.
How Homeowners Insurance Companies Can Let You Down
Mark Friedlander, a spokesman for the Insurance Association of Insurance Companies, explains that there is a difference between canceling your homeowner’s insurance and choosing not to renew it.
A cancellation means that the insurance company is withholding your reimbursement during the coverage period. Meanwhile, non-renewal occurs when the insurer stops paying you at the end of the renewal period.
Common reasons for homeowner’s insurance cancellations
Insurers may cancel a policy if:
- You are unable to pay your insurance premiums.
- You committed insurance fraud or misrepresented your insurance information.
- You do not make the timely repairs requested by the new insured after inspecting the home that was ordered by the insured.
In rare cases, the state’s insurance regulator may allow home insurance to cancel policies that are still in effect for reasons that don’t apply to you as a homeowner, according to Friedlander.
For example, the Florida Office of Insurance Regulation recently approved the cancellation of 68,200 policies of FedNat InsuranceGroup in the Sunshine State because the company is undergoing financial restructuring. Under state law, policy holders are given 45 days’ written notice.
A policy can be canceled when the government authorities find that the insurance company has financial problems, which means that it cannot survive. In the past year, several insurers in Florida and Louisiana have been declared insolvent, Friedlander says. In insolvency, the insurer is closed and the public authorities take over its assets.
In the event of insolvency, the guarantor takes action to provide insurance coverage and support.
Each state, including the District of Columbia and Puerto Rico, has two types of guaranty associations: a property and casualty insurance association, which includes homeowner’s insurance, and a life and health insurance association. By law, a home insurance provider licensed to do business in the state must be a member of the state’s property and casualty insurance association.
When an insurer is declared insolvent, the guarantor will transfer the failed insurance policies to another insurance company or cover individual policyholders.
Common reasons for homeowners insurance not to renew
Non-renewal occurs when your insurance company chooses not to renew the policy after it expires. If your insurer decides not to renew your policy, it must notify you in advance. You should have several days’ notice, the amount of which usually depends on state law. The insurer must also provide a reason for not renewing.
Reasons for non-renewal may include:
- The insurance company limits the amount of money it can repair or sell your home. For example, if there have been many natural disasters that cause many claims in the area.
- An insurance company is supporting the home insurance market in your area for business purposes.
- You committed insurance fraud.
- Your insurance rates have dropped significantly.
- You filed several complaints.
What Should You Do If Your Homeowner Loses Security?
Insurance companies often require you to notify you that you are not renewing or canceling your policy before your policy expires, such as 30 or 45 days. This gives you time to purchase another policy.
The insurance provider must explain the reason for the termination of the coverage. But if it fails to do so or you don’t know why, ask your insurance company. If you disagree with the reason, consider filing a complaint with your state’s insurance adjuster.
In order to dispute your non-renovation if it is related to your location that is hazardous due to hot weather, you may need to show documentation that your home is in a hazardous location or show that you have completed it. climate mitigation measures.
Start shopping for new homeowner’s insurance
Whether you’re foreclosing or not renovating, you should start buying new home insurance to avoid foreclosure.
It is wise to compare home insurance rates between many insurance companies to find similar coverage to make sure you get the cheapest insurance that fits your needs. Make sure you have your new policy before the old policy expires, and inform your rental company about the new insurance company.
You may need a FAIR plan as a last resort
But what if you can’t get help with a new insurance policy? As a last resort, you can purchase the Fair Access to Insurance Requirements (FAIR) program, which is a government program that provides insurance to the most consumers.
FAIR plans are often more expensive than standard policies and have limited coverage.
Friedlander says Citizens Property Insurance Corp., Florida’s last insurer, is adding 6,500 policies a week and has surpassed 850,000 total points to become the largest insurer in the state. Citizens is expected to exceed 1 million policyholders by the end of 2022.
Elsewhere in the country, California enacted a one-year ban on insurance companies canceling or not renewing home insurance in certain areas or near wildfires after the governor declares a state of emergency.
Related: How FAIR plans work for home insurance
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FAIR Plan FAQ when your Home Insurance is Reduced
Here are some things you need to know about FAIR plans if you can’t buy homeowners insurance elsewhere after the policy is lost.
Frequently Asked Questions
A FAIR plan is a type of home insurance that you get when you don’t buy coverage elsewhere, for example if your home is at risk of a hurricane or wildfire.
These plans are managed through state-run agencies, but are paid for by state taxes and all state-licensed insurance companies. All costs and benefits are shared by this group of insurance companies, which makes it easy to cover the risk and its implications.
What does the FAIR plan involve?
FAIR plans cover damage to your home due to fire, vandalism, riots and storm damage. Most FAIR plans reimburse actual cash rather than replacement cost.
Only about 12 states have FAIR plans that offer additional coverage and that include homeowner’s insurance, according to the Insurance Information Institute.
For example, in California, you can buy what is called a “conditional difference”, which means that you get coverage to help your FAIR policy provide you with the same or similar coverage as your home insurance policy.
How do I purchase a FAIR plan?
You can register for a FAIR plan on your FAIR website. In most cases, an insurance agent will fill out your online form and submit it on your behalf. These agents act as liaisons who can help you apply for the FAIR plan. You can search for one on your FAIR plan website.
To qualify for a FAIR policy you may need to show proof that you cannot purchase a policy on the private market and may need to make improvements that reduce the risk of fire, theft or water damage insurance, such as roofing. repairing or upgrading electrical systems.