Homeowner's insurance companies change their business models from time to time. When they are profitable, they cut premiums and boost coverage to increase market share. When times get leaner, they raise premiums and start dropping policyholders in order to reduce risk. There are steps that you can take to protect your coverage, and some things that you can do if your company decides to cancel your coverage.
Shop For a New Policy
Your insurance company may drop you because of their experience in your particular area. Sometimes companies decide to leave an area where they have experienced a high number of claims. This often happens in areas prone to natural disasters, such as hurricanes, but it can happen for reasons that might not be clear to you. Check with an insurance agent to see if coverage is available from another company. They may still be writing policies in your area, and you may be able to save money as well.
High Risk Pools
Many states offer high risk homeowner's insurance pools. For instance, In California, you can get earthquake coverage from the California Earthquake Authority if you can't purchase a policy from a regular insurance company. The premiums will probably be higher, because you are in a high risk pool of people who are more likely to file an insurance claim and suffer a loss. But in some cases, this may be the only option that you have for coverage if your current carrier is dropping you.
Can You Keep Your Current Policy?
You may be able to keep your current coverage if you make some changes. If you have a particularly low deductible, $100 for instance, you may be able to keep your coverage by increasing your deductible to $2,500, or by switching to a percentage of value deductible, where your coverage begins when damage exceeds a certain percentage of your property value, usually 5 to 10 percent. By doing this, you self-insure for smaller accidents, and the insurer knows that you are much less likely to file a claim with the higher deductible. You might be able to keep your coverage by switching your auto insurance to the same company, giving them more of your business.
Preventing Dropped Coverage
In some cases, there is nothing you can do to prevent dropped coverage, but you can take steps to help prevent this from happening. Keep your property in good repair, with a tight, waterproof roof. Keep your deductible high, self-insuring the lesser claims. Consider self-insuring water damage claims by paying for the repair yourself. Water damage claims seem to be a concern to insurance companies, and can lead to dropped coverage. Make sure that you don't even report the damage to your insurance company unless you are sure that you will be filing a claim. Just the report of damage can cause some insurers to drop coverage, even if it doesn't cost them a dime.
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