Homeowners Insurance, Cancellation vs Nonrenewal
  • Post last modified:May 27, 2020
  • Post category:Homeowners Insurance

Once you enter your Connecticut home insurance policy “term period”, it cannot be simply canceled or not renewed. In most cases, an insurance company must provide coverage for the entire term period regardless of the risk unless notice is pushed out to a client within a specified amount of time in every state it may vary.

Canceled or Non-renewed?

There is a big difference between an insurance company canceling a policy and choosing not to renew it. Insurance companies cannot cancel a policy that has been in force for more than 60 days except when:

  • You fail to pay the premium
  • You have committed fraud or made serious misrepresentations on your application.

Nonrenewal is a different matter. Either you or your insurance company can decide not to renew the policy when it expires. Depending on the state you live in, your insurance company must give you a certain number of days’ notice and explain the reason for not renewing before it drops your policy. If you think the reason is unfair or want a further explanation, call the insurance company’s consumer affairs division. If you don’t get a satisfactory explanation, call your state insurance department.

The company may have decided to drop that particular line of insurance or to write fewer policies where you live, so the nonrenewal decision may not be because of something you did. On the other hand, if you did do something that raised the insurance company’s risk considerably, like committing fraud, the premium may rise or you may not have your policy renewed.

If your insurance company did not renew your policy, you will not necessarily be charged a higher premium at another insurance company.

Protecting What Matters

If your homeowner’s insurance is canceled or non-renewed you must find replacement coverage right away. Value Penguin explains the importance of avoiding a lapse in coverage whenever possible, especially if you have a mortgage. 

Homeowner’s insurance policies usually lapse because a policyholder failed to make multiple payments. If you miss a payment, companies usually continue to cover a residence for 30 days before the policy lapses and are no longer covered.

There are a few reasons you should never allow your homeowner’s insurance policy to lapse. The most obvious being that you won’t be adequately protected. Remember that home insurance covers more than just the structure of the home. It also protects your personal belongings, provides liability protection, and covers living expenses if your home becomes uninhabitable.

A gray home with an American flag flying in front.

Beyond exposing yourself to a potentially crippling financial risk, allowing your home insurance policy to lapse might cost you a lot more money in the long run. Most homeowners are required to buy a home insurance policy if they purchased their home through a mortgage lender. Lenders require the coverage because they want to protect their financial interest in the home.

In the event a policy lapses for any reason, a mortgage lender will find an insurer to cover the home on behalf of the policyholder. Policyholders should do everything they can to avoid this circumstance because they will be financially responsible for the cost of the new policy. Lender-placed policies are frequently higher than what policyholders might find otherwise and their level of coverage might not be adequate. 

For example, a lender-forced policy will appropriately cover the physical dwelling itself but might fall short in terms of personal property coverage because they have no financial stake in a homeowners possessions.

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We’re Here When it Matters Most 

That’s why we’re committed to helping you understand your coverage options needed to help insure your home, and to help you find the best rate by shopping all of our carriers. We’ll talk with you to get a firm grasp on the exposures you face, and then work to make sure you don’t have any coverage gaps that could cost you money down the road. As a local, independent insurance agency, we have direct access to multiple carriers, so we can quickly compare rates and coverages and get you the best possible homeowners insurance.