Is there a difference between cancellation and non-renewal?
Yes. But the real issue here is non-renewal. Even if you've filed only one claim, you could be in danger of losing your home insurance coverage.
Insurance companies cannot cancel a policy that has been in existence for more than 60 days, unless you neglect to pay your premium or have misrepresented yourself on your application. Rather than canceling your policy if you file a claim, what your insurance company can do is simply refuse to renew it when it expires.
How can you do to avoid being cancelled?
There are a couple of things you can do:
- First of all don't file a claim on anything that you can pay for yourself. Suppose you loose your wallet in your home or have a lawn tractor stolen. Rather than filing a claim, absorbing the cost, while it may be frustrating is a lot better than losing your coverage, and having to search for a new insurance company. More than likely at a higher premium than your current home insurance premium.
- Another option is to raise your deductible. In doing so you can save money on your premium, and you are at less of a risk for non-renewal if you file a claim. Before raising your deductible, be sure you are able to pay that amount.
You should also know, you do have recourse if your insurance policy was not renewed. Many states require insurance companies to give you a certain number of days' notice as well as an explanation for non-renewal. If you feel that you've been treated unfairly, you can call your insurance company's consumer affairs division or your state's insurance commission.
The number one reason for non-renewal, is filing a large number of substantial claims. However, your insurance company may simply have decided to drop your line of insurance or write fewer policies in your geographical area. In cases like this, when non-renewal clearly wasn't your fault, you may not have to pay higher premiums with a different insurance company.
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