You probably know you can cancel an insurance policy for many reasons: better coverage, cheaper premiums, etc. But did you know that your insurer can also cancel your home insurance?
To help make sure you never get caught without homeowner’s insurance, here are four reasons why an insurer might cancel your policy.
Being Late (or Not Paying) Your Monthly Premium
Arguably the number one reason why your insurance policy might be cancelled stems from paying your monthly premiums late – or failing to pay them altogether.
Even the most diligent customer can have an off-month where things get crazy, and you find yourself unavoidably late with a payment. A quick phone call to your insurance provider the moment you realize this, along with prompt payment of the outstanding balance and any associated overdue fees, can generally resolve the issue without coverage interruption.
If it happens more than once, however, you could find yourself in an entirely different scenario.
Multiple missed payments not only cause your insurance provider to incur additional banking fees, but it can cause your home insurance to be cancelled as well. If you think you might be late with a payment, call your insurance company. A different payment withdrawal date, one that aligns with your payday, might be all you need to ensure future premiums are paid in full and on time.
Non-Disclosure or Misrepresentation (Whether intentional or accidental)
Failing to be completely accurate when setting up your insurance is a serious issue. Forgetting to include information could have an impact on your coverage – like saying your home will be your primary residence, but you really plan on using it as a rental property (which will have higher insurance rates) – that can also result in your home insurance being cancelled.
However, if you mistakenly report the year your home as having new windows installed in 2014, but later on you find out it was really 2010, notifying your insurer will generally resolve the issue, without an interruption in policy coverage.
Not Using Insurance Claim Money To Fix Damages
If your property is damaged and you file a claim, and are awarded money to make repairs, spending that money on something else is another situation that can result in your home insurance being cancelled.
Insurance providers generally request proof of completed repairs, such as invoices from contractors or before and after photos. Submitting false contractor invoices (or invoices from an earlier or unrelated repair) can not only cause your current policy to be cancelled, but it could make things very difficult to secure coverage in the future.
You’re No Longer Eligible Under Your Existing Policy
One way your home insurance can be cancelled is if your risk changes. If your existing policy covers your home as your primary residence, but you decide to open a home-based business, you may be increasing your insurance risk. Operating a company such as in-house daycare or a bed-and-breakfast can dramatically change your liability, and that can mean you’re no longer eligible for coverage under your existing insurance policy. To make sure you don’t unexpectedly find yourself without coverage, be sure to check with your insurer before you put any entrepreneurial plans into action.
Cancellation of your home insurance can mean more than just paperwork; it can have a significant impact on other areas, like securing a mortgage: home insurance is frequently a necessary financing condition. In certain situations, if you can’t get home insurance, you may not be able to get a mortgage.