Most mortgage lenders require homebuyers to purchase homeowners insurance. While the policy is a requirement of your mortgage lender, it helps homeowners protect their property from damages and loss. That means even if you don’t have a mortgage, you would benefit from the policy. It’s important to remember that you must maintain your property according to your provider’s rules and standards. Failing to do so may result in reduced coverage or termination.
In this article we will discuss why providers reduce or terminate coverage and how you can avoid your homeowners insurance from being cancelled.
The biggest reason a homeowner may lose insurance coverage is property negligence. Many insurers will send evaluators to inspect the condition of the properties they insure. If the inspector notices problems with the property, such as broken railings, roof leaks, or any other maintenance issues, homeowners risk losing coverage.
For instance, if your property has water damage there’s a greater chance mold will develop. Similarly, if there’s broken railings on your stairs there’s a greater risk that someone will get injured. Insurance companies don’t like risk and may raise your prices or even drop your coverage in these situations.
If your home isn’t well maintained the chances a claim will be filed increases. As a result, your insurer will send a notice that specifies what needs to be fixed and by when.
The property owner will need to document the changes and show proof with photos and repair bills. It doesn’t end there however, an inspector from the insurance company may visit to verify that the changes were made. They could also make frequent visits to be sure you’re staying on top of your property.
If the owner thinks the property doesn’t need repairs, they can file an appeal with the insurance company to reconsider the request. However, if the insurer believes that the property needs repairs and overlooking them can create risks, the company can deny the policyholder coverage.
The property owner would then need to choose whether he wants to do what the insurer asks or buy a new policy — but of course, he risks other providers making similar demands.
To avoid your homeowners insurance from being cancelled, you need to make sure that your property is well maintained. It will not only allow you to keep the insurance coverage you shopped for but also help you to avoid expensive repair bills.
Thus, consult an expert to learn more reasons behind a policy cancelation.