Understanding Homeowner's Rights
Homeowner’s insurance is a vital and necessary component when you own your own home. However, just because it’s required does not mean your rights are not protected. Home and property insurance is heavily regulated, at both state and federal levels, to safeguard you in case there are issues with your policy, or if you have trouble obtaining coverage. These regulations can vary state by state, so be sure to check with your policy and state’s laws for the specifics of your policy coverage.
Premium Changes, Cancellations, and Non-Renewals
If your insurance company has made an error in calculations for your premium payments within 60 days of initial coverage (this number will vary state to state), they are required to notify you and make the correction. If your premium amount appears unacceptable, or if there is an error by your insurance company, you can cancel your policy. For the most part, insurance companies will want to avoid any cancellations and will try to work with you to correct the mistake.
If you have surpassed 60 days of effective coverage (again, check with your policy and state laws for this designated time frame), your insurance company will have restricted options to cancel your coverage, notwithstanding failure to pay your premiums. Your insurance company is obligated to provide a reason for cancelling your policy X-amount of days prior to end date. If your insurance company has decided not to renew your policy, they are also required to provide notification of non-renewal 45 days (check with your policy) before your end date so that you have ample time to seek alternative replacements.
In the case of cancellation of coverage, by either you or your insurance company, you may be entitled to a partial refund. Typically, a pro-rata calculation is employed for refunds, save for administrative fees to cover the procedure.
High Risk Insurance and the FAIR Plan
If you or your home is deemed high-risk, whether by previous history or by location (high chance of natural disaster or crime), insurance companies may refuse to insure you. If that is the case, you can seek high risk insurance or a FAIR (Fair Access to Insurance Requirements) Plan. These are programs that are subsidized by the government through private insurance agencies.
However, FAIR should be a last resort at finding an insurance company that will provide you coverage, and there is no guarantee that you may be found eligible. Some states will require you to provide proof that you have been denied. If you are found eligible for FAIR, you should be aware that additional regulations and requirements may be requested to minimize further risk to both your home and the insurance company. These include backup systems for your plumbing, replacing roofs and wiring, or installing burglar alarms.
You should only consider applying for FAIR if you have exhausted all your other available options. You may be able to find coverage by offering to pay a higher deductible, and/or paying for smaller issues and repairs on your own. An insurance broker may be able to assist you in finding high risk insurance, or help you apply for FAIR if you qualify.