Why Would Homeowners Insurance Be Cancelled?

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   Jack Heller

   Owner, Insurance Browser,

   Generally speaking a policy is cancelled for non payment of premium. That is by far the most common reason. Some states allow a carrier 60 days to decide if they will accept an applicant / insured which gives an insurer time to inspect and make some determination. After 60 days most states require the insurer to remain on the exposure till the end of the term at which time they can decide not to renew a policy. Property is different in a lot of ways from auto insurance. Carriers often put into effect moratoriums on new coverage in the instance of a natural disaster ( flood, wind , Hurricane, wild fire , tornado, earthquake. ) During these specified events a company may take the position that a policy was not authorized to be issued. Additionally, carriers often are faced with exposures they only find out about by doing a property inspection. So, it is not uncommon, for the policy to be written with as much information as is known by the agent, but then the risk emerges as being more subject to loss than they understood originally. All property insurance is somewhat reviewed in the general COPE formula for underwriting. COPE stands for Construction, Occupancy,Protection,and Exposure . Construction can mean the simple review of materials or the type of construction ( i.e. Log homes ) is not one the carrier wants. Occupancy sounds pretty simple , but there are houses that are not occupied,,seasonally occupied or even occupied by a business and not something the carrier  wants. Protection stands for the type of protection afforded the structure/contents from loss. That could be as simple as what Public Protection Class, PC  a home has ( PC represents a grading system for fire departments in the US) or it can be an assessment of protection from a different peril i.e. burglary. And then lastly there is exposure. Here you might be thinking about the fact that the home is fine , but it is surrounded by brush in CA, or is a mile form an ocean, or is adjacent to a chemical factory. Lastly, keep in mind that a homeowners policy also has a section for liability coverage. If you have a trampoline in the yard, a swimming pool with no fence, a large or dangerous dog, a carrier may deem you to be an exposure they simply do not wnat.

   Answered on December 22, 2013

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