Homeowner's insurance is not only a good thing to have for your own protection and peace of mind, but if you have a mortgage, your lender will probably require it. However, you can be denied coverage if one or more insurance companies feel your property presents too much of a risk for repeated claims, or if you present too high a risk for non-payment of premiums.
Home insurance companies can deny you coverage if your credit rating is poor. Insurers have determined that potential customers whose credit rating is poor are also those who are most likely to attempt to make fraudulent claims or otherwise pose added risks to insurance companies. Make sure your credit report is in order by correcting any errors and by entering into agreements to pay any bad debts before you apply for homeowner's insurance.
Some states allow insurers to deny coverage to property that is located in areas prone to natural disasters. For example, Connecticut allows insurers that have issued a large number of policies to homeowners in coastal areas to refuse new policies in those areas. Most states allow companies to refuse coverage if a property is located near a specific source of additional risk such as an abandoned building or a marsh. In these cases, states may offer high-risk pool insurance, or a specialty insurer may provide coverage at a higher cost.
If you purchase a home that needs extensive renovation to make it livable, insurance companies may deny you coverage until you complete necessary renovations, or they may issue coverage with the provision that you complete the repairs within a certain period of time. You may need a different type of insurance while you are renovating your home, especially when you are not living there during renovations. Speak to your mortgage lender and a professional insurance broker to determine what coverage you need and can obtain for a home that you want to renovate.
Age of Property
Insurance companies cannot refuse to cover older homes in most states based on the age of the home itself. However, if plumbing and electrical systems are worn out and do not meet current local standards, companies can deny coverage until you replace the outdated systems. If you are purchasing an older home, make sure you are aware of the condition of the heating, wiring and plumbing systems so you can make necessary arrangements to modernize them as necessary.
Insurers can refuse coverage for homes located in high-crime areas. They can also refuse to renew your coverage if you make too many claims in too short a period of time, or if you fail to pay your premiums in a timely matter. Fraudulent claims are not only a reason for denial of renewal coverage, but they constitute a criminal offense. It also may not pay to file a claim for minor damage soon after you have received reimbursement for a major event.
- Realty Times: What to Do If You Can't Get Homeowners Insurance
- Connecticut General Assembly: OLR Research Report: Homeowner's Insurance....Distance from Shore
- Minnesota Department of Commerce: Home Insurance: What You Need to Know
- Commonwealth of Virginia: State Corporation Commission: Know Your Rights Regarding Homeowners Insurance
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