Homeowners insurance can protect one of your largest investments: your home. If an insurance company has told you that you’re ineligible for home insurance, don’t panic. You have options at your disposal, regardless of your situation. You can start the process by comparing quotes from multiple insurers.
Here’s what you need to know if you’re struggling to get home insurance or an insurer has denied you coverage.
High-risk homeowners have options. You can look into purchasing coverage from an insurer specifically geared toward high-risk homeowners or a FAIR Plan policy if your state offers it. Improving your credit score, repairing property damage, and keeping your claim frequency low can also make it more likely for an insurance company to issue a home insurance policy.
If you’re having a hard time solidifying homeowners insurance, consider the following tips to increase your chances of receiving coverage.
Some home insurance companies specifically gear coverage toward high-risk homeowners. These companies offer non-standard policies, which usually have more lenient eligibility criteria but come with higher premiums.
You may be a good candidate for non-standard home insurance if your property has unique construction elements, like a flat roof or timber framing. It may also be a good option if you live in an area with harsh weather conditions or high crime rates. Non-standard insurance might also apply to you if you have a poor credit history or have declared bankruptcy in the past.
You can reach out to an insurance agent or real estate agent to learn more about which high-risk insurance products may be available to you.
Some states offer Fair Access to Insurance Requirements (FAIR) Plans as a last resort option for homeowners who don’t qualify for traditional home insurance policies. Funded by taxpayers and private insurance companies, these plans offer coverage from several insurers.
Insurance companies are more likely to approve you for home insurance coverage if you have good to excellent credit. By improving your credit score through timely payments and less debt, you’ll increase your chances of landing a homeowners insurance policy.
Another way to strengthen your home insurance application is to repair property damages, such as a leaky roof or foundation problems. This decreases the chances of you filing future insurance claims related to these damages.
The more you file home insurance claims, the riskier you become in the eyes of a home insurance company. For this reason, you should only file claims when it makes financial sense. If the damage is minor, you might be better off paying for it out of pocket. A good rule of thumb is to file a claim only if you believe the damage will cost more than your deductible to repair.
A home insurance company may deny your request for coverage for a number of common reasons.
Studies have shown that people with lower credit scores file more home insurance claims than people with good credit, which costs insurers more money. If you have a history of filing many claims, a company or its independent agents might be hesitant to cover you.
During the application process for a home insurance policy, most insurance companies will consider hazardous features in and around your home. These may include swimming pools, ponds, trampolines, wood-burning stoves, outdated heating systems, electrical wiring, or trees with low limbs.
Since high-risk features can increase your likelihood of filing a claim, insurers may decide to deny your coverage.
Through the comprehensive loss underwriting exchange (CLUE), insurance companies can easily access your claims history. The report outlines the types of losses you’ve had in the past and how much insurers had to pay out. A frequent claims history will make it riskier for insurers to provide coverage for your home.2
Though you can’t control theft rates, accident rates, and natural disasters in your area, these factors can work against you when you apply for home insurance. For example, home insurance companies may deny homeowners who live in risky locations with many hurricanes or tropical storms. Or insurers may increase premiums significantly.
In most cases, your home must be your primary residence for an insurer to cover you. If you rent out your home or plan to rent it out in the future, getting home insurance coverage can be tricky. Most standard home insurance companies don’t accept homes that owners list on rental websites or purchase explicitly for rental income. You’ll need a different type of policy if you want coverage.3
If you have a mortgage, your mortgage lender will require you to purchase a certain amount of home insurance and include this information in your mortgage agreement. State law doesn’t require you to buy homeowners insurance if you own your home, but forgoing a policy can cost you.
Without adequate coverage for your home and personal property, you may be responsible for thousands of dollars (or even more) in uninsured losses after an unexpected disaster strikes. These hefty out-of-pocket expenses can wipe out your savings and put you in a devastating financial situation.
In addition to protecting your home and its belongings, home insurance offers liability protection, which can be a real lifesaver if you damage someone’s property or someone incurs an injury at your home. Investing in a policy can offer you some much-needed peace of mind in a variety of situations.
Many factors affect the availability of home insurance, including:
It’s important to secure insurance coverage for your home. The following information can help you decide what to do next if an insurer denies selling you home insurance.
You may be ineligible for a home insurance policy if you have a poor credit score, high-risk features on your property, or a history of frequent claims. Home insurance coverage may also be a challenge to obtain if you live in a risky location or rent your home for the short or long term.
If you’re unable to get home insurance coverage, you could face hefty out-of-pocket costs for repairs or replacement in the event of a disaster like theft, water damage, or a hurricane. Having no home insurance can take a significant toll on your personal belongings and finances.
Yes. You can find coverage from a high-risk insurance company or a FAIR Plan in your state. Working on improving your credit and removing risky features from your property can help as well.
If a company has denied you home insurance due to previous claims, you may want to explore a FAIR Plan or high-risk insurance company. It’s also a good idea to limit the number of claims you file in the future.
By maintaining good credit, keeping claims to a minimum, and getting rid of pools, trampolines, and other high-risk features, you can increase the likelihood of getting home insurance coverage down the road.
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