Why Insurance Companies Might Not Renew Your Coverage

Lidia Davis
Lidia Davis

It’s often referred to as being “dropped” by your insurer. But that isn’t actually what happens, although it might feel like you’ve been tossed to the curb. There’s a clear distinction between a non-renewal and a cancellation of your insurance policy; the former refers to an insurance company’s decision not to assume your ongoing “risks” upon your policy’s expiration date, based on an insurer’s assessment of your home or property. A cancellation, on the other hand, can happen during a contract when you fail to pay your premiums, commit fraud, or “seriously misrepresent” information on your application, according to the Insurance Information Institute (III).

“Homeowners insurance companies don’t drop you,” said Lynne McChristian, a spokesperson for the III. “They might not renew your policy — and it’s usually for a good reason.”

The term “dropped” might connote an element of surprise in losing coverage with a particular insurer, but this is hardly the case. While guidelines differ by state, insurers are required to issue a notice for both non-renewals and cancellations, which typically range from 30-90 days prior to the event. This window also gives you the opportunity to contact your insurer to see if there are actions you can take to keep your policy, or you can contact your state’s insurance bureau for more information.

In most cases, insurers have to tell you what they think is wrong before deciding not to renew your policy, and this goes back to McChristian’s mention of a “good reason.” However, the decision making that goes into “dropping” you is complicated. Insurance companies are entitled to change their parameters for assumed risks or the way they manage their businesses. Think of it this way: If you were to agree to pay for damages to a person’s home in exchange for a monthly fee, you’d probably want to know that person takes good care of their home and have protections in place for yourself in case they don’t. That’s certainly simplifying the insurance process, but it helps show how both parties need to remain true to their respective ends of the bargain. This is why we recommend reading your state’s guidelines to see what qualifies as a non-renewal and a cancellation.

A non-renewal depends on you, the company’s underwriting policies, and its discretion (among other things)

It’s difficult to ascertain just how many claims it takes to tip you into non-renewal territory, but insurers use a process known as underwriting to carefully assess your unique risks and how the company might insure them, and at what cost. Underwriters evaluate your property and are trained to foresee potential claims, which helps them decide how profitable it would be for the company to insure you. Such an assessment also relies on your record or Comprehensive Loss Underwriting Exchange (CLUE) report, your location(s), credit history, etc. Generally, the more claims filed, the riskier your location (a place more susceptible to extreme elements or even theft), and the worse your credit score, the higher your premium — insurers have to compensate for assuming your determined risks in some capacity.

A few reasons why an insurer might not renew your policy

Maintenance of your home

A non-renewal is done on a case-by-case basis. Depending on your insurer’s underwriting guidelines, if you repeatedly have issues with water damage and an old plumbing or electrical system that could pose higher chances of water or fire damage, your insurer could see you as potentially “riskier” and decide not to continue doing business with you. On the other hand, there are instances where an insurer will suggest updating your systems or a complete policy change to help them mitigate risks, as opposed to making an executive, outright decision not to renew your policy. All is not lost.

Say you have HO-3 policies on two homes — one of which you later decide to vacate for several months out of the year and at which you don’t perform routine maintenance checks while you’re gone, leaving the home susceptible to things like water, wind damage or theft. There are several ways this could go, depending on your state and insurer. But if an insurer discovers this vacant home with pending risks via inspection, that insurer could offer a somewhat limited or focused switch to a dwelling fire policy. Of course, you can choose to decline and shop around, but if you pay a mortgage, your lender will likely require you to have insurance regardless.

Claims that are too frequent or too expensive

In some cases, filing one or two claims can cause your insurer to not renew you. But this largely depends on the size and nature of the claim(s). It’s no secret that filing an auto or home insurance claim can increase your premiums — but how many claims does it take to signal a non-renewal? We can’t answer that, unfortunately. You can, however, rest assured it’s unlikely you’ll be canceled just for making several claims. Insurance is all about risk assessment, and if you are asking for more than you’re paying the insurance company in premiums, then you might want to think about preparing for a non-renewal. But this isn’t cut and dried, either: If you have the potential to file several claims in the future based on your record, the company can also choose to not renew you. What lies behind the word “potential” seems like a mystery, but it usually involves careful consideration of your insurance (and possibly credit) history.

Insurers also have to account for the likelihood of fraudulent claims, like exaggerating losses or non-existent damages. According to the III, property/casualty fraud from 2013-2017 cost insurance companies nationwide about $30 billion per year. Thus, insurance companies generally want to play it safe when it comes to an individual who throws an abundance of high-dollar claims on their desks.

A low credit score

The Federal Trade Commission conducted a study and found that lower credit scores are “effective predictors” of risk. Thus, insurers want people they can trust with their money and believe a lower credit score might show poor or careless spending habits. In fact, according to The Zebra, those with poor credit scores (300-579) pay over twice as much in auto premiums as those with exceptional scores (800-850).

Just because you see a dip in your credit score doesn’t automatically mean your insurance company is going to not renew your policy. It might depend on the severity of your score and the measures you’re taking to bring it up, such as keeping balances low and paying debts on time and in full.


If you live in an area prone to disasters such as hurricanes, tornadoes, extreme winds, hail, etc., chances are high your insurer is going to see you as an increased risk. Just take, for example, the average cost of homeowners insurance (HO-3 policies) in hurricane-prone Texas, Florida, and Louisiana — $1,937, $1,918, and $1,967, respectively, compared to the national average of $1,192.

Wind and hail also account for the largest share of property damage claims. If you live in an area with a propensity for these elements, you could see higher premiums or a non-renewal notice, especially if you file several claims as opposed building stronger supports on your home to try to mitigate the risks yourself.

Having certain breeds of dogs or pets

In the 1990s, the Centers for Disease Control (CDC) conducted a broad study that looked at “dangerous” breeds of dogs by dog-bite related fatalities and found the pit bull to rank number one. Insurers might still follow this data and choose to not insure you if you have a dog (or exotic animal) that has a history of being aggressive or disease-prone. If you have a dog breed that has been known to be dangerous or aggressive, communicate this with your insurer before signing an agreement.

Don’t always take it personally

A non-renewed policy could have absolutely nothing to do with you. In some cases, it could be as simple as an insurer deciding to take on fewer homes in your area.

“Some companies may have different underwriting guidelines within their business where they might say ‘we will not insure people who have a dangerous breed of dog,’ for example,” McChristian said. “Or, ‘we are only going to take X amount — a percentage — of homes that are in high-risk, coastal areas’.”

Also, keep in mind that insurers want your money. So — even if you do pose certain risks, you’re not always guaranteed, or even likely, to be “dropped.” This isn’t to say your insurer will always give you this option — it’s always best to communicate with your insurer on the condition of your home or when you get into an auto accident.

What you can do before and after a non-renewal, cancellation

Whether you’ve dealt with a non-renewal or simply fear one — there are a few things you can do before and after to prevent it from happening or prevent a future occurrence. As long as you’re honest and pay your premiums, you can generally feel confident your insurer won’t cancel your policy, but non-renewals can be somewhat unpredictable.

Try to take an insurers’ recommendations post-inspection:

Insurers will generally want to conduct a home inspection at the inception of your policy to ensure you’re getting the right amount of coverage and they’re not getting into too volatile of a deal. They’ll also be looking for specific risks and might suggest you fix your roof or plumbing system — to better prevent a non-renewal, it’s best you take those considerations into account, especially if you plan on staying with the same insurer. Again — the insurer isn’t the only one with the right to not renew a policy.

Shop around:

The beauty of the insurance market is there are many, many players. If one declines to renew your policy, you have the opportunity to jump ship. This is also why it’s important to look at several insurers in your initial search for homeowners or auto insurance. You can start by taking stock of reputable providers available in your state. If you’ve gone through several providers and still can’t find coverage (maybe you live in a high-risk area), you can contact your state bureau for other options, including a Fair Access to Insurance Requirements (FAIR) plan. These were designed to cover those who have little control over their scenario and still can’t find insurance. Do note, though, that FAIR plans are not offered in every state, and because they assume higher levels of risk than most providers, these plans are more expensive.

The bottom line

McChristian recommends seeking an independent insurance agent who represents multiple companies to find the best policy for your situation in the event of a non-renewal, or if you simply want to know of all your options. It’s their job to find you an alternative, she says.

“It’s not anything that should cause consumers worry [non-renewals], because insurance companies want to insure people,” McChristian said. “And there are all types of regulations that protect consumers from being caught unaware.”

About the Authors

Lidia Davis

Lidia Davis Contributor

Lidia is a former writer for Reviews.com. She’s researched and written extensively about home security, home automation, online privacy, and many other subjects at the intersection of technology and culture.