Unfortunately, many people continue to get notices from their homeowners insurance carrier that their policy will be cancelled or will not be renewed. This creates a new risk for many homeowners as both the availability and cost of homeowners insurance has continued to create a financial strain.
While options are limited, there are a number of actions that homeowners can take to be prepared for the risk from having their homeowner’s insurance not renewed. First, if possible, take action to reduce the risk to your home so that an insurance company may not cancel your policy to begin with or may reconsider if you appeal their decision and show the actions taken. This can include creating defensible space and/or installing systems to reduce the risk or damage likely to result from a fire or other peril.
Second, be prepared for the financial hit. Many homeowners have a mortgage on their home. Therefore, if their policy is cancelled and they are not able to obtain replacement coverage they will be at the mercy of their mortgage company which will obtain coverage and bill the homeowner. In many cases this will come with a sharp increase in the annual premiums. So, it is best to be prepared for the potential expense rather than being caught in a financial jam.
Third, explore coverage options through your state’s FAIR Plan. This coverage is generally much more expensive and not nearly as comprehensive as other insurance options but, in some cases, it is the only option available. Often, those who are forced to get insurance through the FAIR plan, will need to supplement this policy with other coverages.