Can I Be Refused Homeowner's Insurance?
Homeowners insurance coverage may not be easy for some people to obtain. According to DaveRamsey.com, many homeowners insurance companies have tightened their selection guidelines to minimize claims. In some cases, companies may even refuse to issue policies.
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Claims History
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If your claims history is considered to be excessive by your present insurance company, the company may cancel your coverage if the laws of your state permit it to do so. According to the Wall Street Journal website article, "Getting Insurance Isn't Easy For Some Unlucky Homeowners," filing more than two claims in a three-year period is often the barometer used by insurers. If you're canceled due to high claims frequency, you'll likely have a difficult time obtaining insurance in the standard market with another carrier.
Geographic Location
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Where your home is can affect your ability to obtain standard coverage. Insurance companies that have experienced heavy losses due to events such as wildfires, tornadoes, hurricanes and floods may choose to stop writing new policies for homes located in areas where these occurrences are common. If you are considering purchasing a home in one of these areas, check the availability of coverage as well as the price during your home search.
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Prior Damage
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Homes with a history of certain types of damage may be considered uninsurable by some companies. For instance, homes with the presence of toxic mold may be difficult to insure due to the extensive damage mold can cause and the difficulty involved with getting rid of it. For some types of structural damage, insurers may insist that repairs are made before companies will consider insuring a property or exclude coverage for future claims related to the damage.
Alternative
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If you're having difficulty obtaining homeowners insurance coverage, you can turn to programs offered by your state. Many states offer a version of the Fair Access to Insurance Requirements plan. FAIR plans were implemented in the 1960s to provide coverage for certain types of high insurance risks. Premiums are often higher than on the standard market and coverage may not be as extensive, but FAIR plans can provide a more viable alternative than doing without homeowners insurance.
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References
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