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The Reasons an Insurance Company Could Drop You

The Reasons an Insurance Company Could Drop You

The reasons an insurance company would drop you may be surprising—read on to make sure you and your family know what to expect.

Owning a home can be a lot of work, especially in New York. And part of that work is making sure you have the appropriate insurance in case any accidents, natural disasters, or other devastating issues arise. It's a good idea to look at your coverage every so often because an insurance company can drop a client at any time for a number of reasons they see fit. Some surprising factors play a role in an insurer's decision to drop you and your family from their plan, so read on to learn what may cause your coverage to be canceled and some of the most common reasons insurance companies may drop a client.  

Multiple Claims Filed

Don't take advantage of your own policy. Filing too many claims through your insurance company may cause them to flag you, putting your coverage at risk.

“If you file multiple claims on the same issue over and over, that may create a problem,” says Anthony Marino, a licensed real estate broker in New York City.

Car claims are considered part of this excess, too, if your auto and home insurance are bundled under the same carrier. “Frequent auto claims may affect the home insurance you have connected with it,” Marino adds.

Your Roof is Not Properly Maintained

Look up if you want to keep insurance costs down and minimize the chances of your policy being canceled. The roof of your house is judged by insurance companies when they approve a home owner for a new policy or renewal. Generally, a roof is considered secure for up to 30 years, but after that, it’s more susceptible to water leaks in the home. For this reason, it’s important to know the age of your roof, and keep all documentation and paperwork about repairs and replacements in case your insurance company asks for it.

Tip: Increase the lifespan of your roof by cleaning out the gutters once in a while. If they're clogged or broken, water can back up into pipes, seep into eaves, and result in a rotting roof. This is especially important if your house is surrounded by trees that shed twigs and leaves onto the roof. 

Pet Ownership

Sparky is part of the family, but make sure your insurance carrier feels the same way. Many companies cover pets in a policy’s liability coverage in case the animal injures a human or damages another person’s property. But some animals may be excluded because they are considered “exotics,” such as rabbits and snakes.

“Make sure there is no fine print in your home insurance that prohibits pets or certain breeds of pets,” Marino advises. “Many animals are not covered or will be considered a risk. Make sure to give your policy a glance if you are planning on owning one.”

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Tip: Curious about what animals are illegal to keep as pets in New York City? Check with the Veterinary Medical Association of New York City. You'll be surprised to see which cuddly (and not-so-cuddly) creatures made the list!

The Company No Longer Covers Your Area

Insurance companies frequently review their coverage areas. There is always a chance they may decide to drop coverage in certain areas.

“This may be because there is an abundance of claims in the area, and it's too expensive for the company to continue to do business there,” Marino says. “Remember your rates are affected by other people in your area.”

Failure to Pay

This one is the simplest way to avoid your policy being canceled. If you don't keep up with your payments and pay your premiums, you can be dropped.

Nonpayment is one of the most common reasons a policy is dropped, according to agents at State Farm Insurance. They recommend avoiding nonpayment issues by setting up auto payments.

Tip: Many mortgage companies allow—and even encourage you—to roll your insurance and tax dues into your monthly payments, greatly reducing your chance of failing to pay.

Death

If a house is no longer occupied, it would no longer be insured. Some families don’t want to take on the work of owning or insuring the house, especially if they live out of state, so the insurance lapses.

To prevent this type of cancellation, State Farm encourages their clients to make sure wills are in order, especially if there is little or no family left.

How to Avoid Losing Your Coverage

There are steps a home owner can take to help avoid being dropped by their insurance carrier. For starters, revisit your policy annually to make sure you're fully covered, especially if your house has gone through some wear and tear, or the complete opposite in that you've expanded or renovated.

There are some quick and easy home improvements you can make to not only stay on good terms with your insurance company, but possibly result in premium discounts, according to Consumer Reports. These include installing a security system and smoke detectors, and adding a generator to help ensure your electrical systems work in the event of a power outage.

Another tip is to comparison shop every few years for new insurance carriers. Businesses, deals, and discounts change, so you don't want to miss out on opportunities to save money.