Non-renewal

For homeowners, having house insurance is essential.

However, an insurance company can decide to discontinue an existing policy after the policy’s original term has ended, an action known as non-renewal.

Non-renewal differs from cancellation in that non-renewal occurs only after the policy’s term has ended, while cancellation of a policy takes place before the term ends.

Why an Insurance Company Might Not Renew a Policy

An insurance company could decide not to renew a policy for a variety of reasons. A policy holder might have filed a number of claims, too many for the insurance company’s preference. An insurance company also might decide that it needs to reduce the number of policies it writes in a certain location.

Additionally, insurance companies have been known to not renew policies in areas prone to natural disasters like tornadoes or hurricanes. Whatever the reason, the insurance company essentially has determined that covering the policy in question is no longer cost-effective.

If an insurance company does decide to not renew a homeowners insurance policy, the company must provide a notice within a certain time period as determined by state law. The company also must explain its reason for the non-renewal.

What You Can Do If Your Policy is Not Renewed

Find Out Your Rights

If your insurance company does not renew your homeowners insurance policy, the first step you should take is to call your state insurance department to find out what your rights are in such a matter. For example, in Florida, an insurance company must wait 90 days after repairs are made on an existing claim before it can issue a non-renewal letter. If you believe that your insurance company did not act fairly in its non-renewal decision, you can file a complaint against the company. You also might have justification to get a hearing.

Take a Deep Breath, and Do Not Panic

While receiving a non-renewal letter from your insurance company might be surprising and somewhat stressful, the good news is you most likely will not have to pay a higher premium at a different insurance company, something that is common if a policy is canceled. Use the opportunity to shop for a better homeowners insurance policy. There is still a great deal of competition within the insurance industry and by collecting multiple quotes, you should find some great discounts on a new policy.