As is the case with any relationship, sometimes things just aren't effective out. When it comes to home insurance, you may choose that it is best to cancel your policy and find your better fit somewhere else. There is however an impact between initiating that cancellation by yourself and achieving the insurer cancel you.
When the second happens, it will almost never help the consumer.
“You'll have to disclose that to every other insurance provider when you are trying to get insurance,” says Daniel Mirkovic, president and CEO at Where you started Insurance. “And it's a lot like a black mark against your application.”
And it just takes a fast telephone call for an insurer to determine if you've had a policy cancelled on you. “Typically companies do this either on a spot-check basis or they might do that at claims time,” says Mirkovic. “So if a claim is at all suspicious then when you're filling out the application you give them permission to visit and retrieve claims information, credit information, and past provider(s).”
But cancellations do happen. So it's a good idea to know why an insurer might pull the plug on your policy. Listed here are six reasons why your house insurer could say sayonara:
1. Non-payment of monthly premiums
This is the most common reason an insurer cancels a policy on a consumer. At Where you started, it makes up about almost 87% of provider-initiated cancellations.
Customers might think that the couple missed payments aren't a big deal. But, says Mirkovic, “This one is very hard for insurance providers.”
While NSF fees are non-existent with monthly charge card payments, each time some insurance company attempts to withdraw a monthly premium from someone's bank account and there are insufficient funds, they get charged an NSF fee of approximately $20.
If you don't think you will have enough money in your bank account one month, Mirkovic says a good thing you should do is notify your provider. That may mean agreeing on the different withdrawal date that lines up more closely with your payday. “Stuff happens,” he states. “If you're giving them a call and you're being proactive, they normally are going to try to accommodate you.”
2. Change in risk, or one a lot of claims
An insurer might cancel your insurance policy for underwriting reasons, including if the risk has changed and if you have made too many claims based on what's specified by your policy. Combined, this works out to be about 12% of all insurer-initiated cancellations at Square One.
One illustration of a change in risk would be in case your roofing materials are past their useful life and the insurer requires you to update them and you refuse. This could be grounds for your insurer not to stay “on risk,” Mirkovic says, requiring you to find coverage elsewhere.
“The insurance carrier might say, 'sorry, we will leave risk as this can lead to other activities.' Since it is not a few if you are likely to possess a claim; it is a few when. And insurance coverage is by pointing out 'if,'” says Mirkovic. “It's not designed to cover expected losses.”
It's important too to be aware of your insurer's policy around claims and cancellations. “Some companies have a strict policy when you've got a claim within the first year, they will cancel,” says Mirkovic. “In situations like this, there's not much that you can do. It's bad luck for those who have a claim within the newbie.”
Mirkovic recommends reading your policy entirely, especially what's underneath the section titled “conditions” to be able to see under what circumstances your provider can initiate cancellation and how much notice they need to provide you with. “You don't wish to register having a company where they've this strict rule that the claim inside your newbie leads to cancellation,” says Mirkovic.
“It's not worth having that black mark upon your record.”
3. The insurer decides not to renew your policy
An insurance provider could cancel your policy if it stops servicing a particular region or stops offering a specific profession.
“Usually this is known as 'non-renew,'” says Mirkovic. “The insurer will send out a notice to customers saying we're no longer offering this. If it's important to you, you have to bring your business elsewhere. Or perhaps in certain cases they might just say 'sorry, we're not writing in this area altogether.'”
Fortunately, this one won't leave a stain in your record, since it's got nothing to do with bad behaviour.
4. Fraud, misrepresentation or nondisclosure
Not the most common, but probably the most serious of ways that a policy could possibly get cancelled you is that if you knowingly lie in your application to be able to secure the policy or get a lower premium.
This may include not providing requested info on time, or whatsoever, that is what went down to 1 man who failed to provide updated information by his auto insurer's deadline, and had his policy cancelled on him.
“If an insurance provider asks a question, you need to do wish to respond,” says Mirkovic.
As for fraud or misrepresentation, “it has to be something that's material to the risk,” says Mirkovic. For instance, if you say that your home is most of your host to residence but it is actually a rental property, you've misrepresented the reality and effectively changed the danger from the outlook during the insurer. If, however, you state that your home was built-in 1970 if this was really built-in 1971, that's less of a concern.
“If the insurance coverage provider can tell, 'had we'd the correct information we wouldn't have insured this insurance policy,' it basically means your policy is void and thus is any coverage under it.”
Companies can void a policy ab initio, that is a latin term which means “from the beginning.”
“It voids the insurance policy as though it never existed,” says Mirkovic. “So they'll actually have to refund all the premiums that they got from you. And it acts as even though there is no policy; that no contract was ever applied for, and for that reason there is no opportunity to file claims under that policy.”
You could easily get all of your premiums back, however your claim isn't getting paid. “And if your whole house burnt down,” says Mirkovic, “then you're outta luck.”
5. Unrepaired damage
A property insurance company can also cancel your policy if one makes claims after which avoid using the claim money to repair the damage.
In most cases, you need to provide proof the repairs have been completed, whether by means of photos or contractor invoices. If an insurer discovers that you used the cash for something unrelated, they could cancel the insurance policy entirely, which could jeopardize your chances of obtaining a policy from the different insurer.
“If a business cancelled just because a claim wasn't handled well [i.e. because the policy holder didn't place the money toward repairs], then your next insurer might be worried about engaging in a relationship with this customer because they're going to think 'are we likely to be equipped to handle claims and are available to a satisfactory conclusion for both parties?'”
6. You switched providers and didn't notify your insurer
If you choose to go back home insurance somewhere else, it's to your advantage to let your current provider termed as soon as possible, especially before your policy gets renewed.
“Most insurance providers automatically renew for the customer's protection,” explains Mirkovic. Like if someone was travelling or became seriously ill and they didn't create a payment per month. Insurers auto-renew so the customer isn't without home insurance for time.
“The customer may think, well, I've bought a policy somewhere else and they also don't go to their current provider and notify them, so the insurance provider then cancels their policy for non-payment,” says Mirkovic. “That's not good.” You are always within contract with your current provider.
If you choose to place your policy elsewhere or no longer require insurance, make contact with your provider right away. “If you do not do that,” says Mirkovic, “again, maybe it's a black mark that you've been cancelled for non-payment.”
Can you dispute a cancellation?
There isn't any formal tactic to dispute a cancellation initiated from your home insurer. “It really depends upon the discretion of each provider,” says Mirkovic.
That said, if you think maybe there were unique circumstances, you are able to ask to achieve the decision appealed and escalated to management and often, insurers will restore your policy. “It all comes down to the circumstances and just how you present your case,” says Mirkovic.
If your policy was cancelled for non-payment, for instance, you can offer to pay the full remaining annual premium upfront. “Usually the provider will offer that to you, but if they do not you're always thanks for visiting claim that,” says Mirkovic. “In most situations like that, I think the provider would say 'ok if you are prepared to repay the premium upfront then we'll reinstate the insurance policy.' Also it never hurts to say that you might want to have this matter referred to a manager. It never hurts to do that.”
Still, you're better off avoiding a cancellation altogether. “Be honest and transparent when it comes to insurance,” says Mirkovic. “You'll usually look for a provider which will use you regardless of your needs.”