What to Do When Your Homeowners Policy is Non-Renewed
You’ve received a notice from your insurance company telling you they no longer intend to insure your home. What do you need to do to make sure your insurance coverage is uninterrupted?
What is a Notice of Non-Renewal?
A Notice of Non-Renewal is issued by an insurance company (in this case, your homeowners insurance company) to notify you that they intend not to renew your insurance policy when your current policy expires. The notice will show the data that the non-renewal will be effective, and the reason for the non-renewal. In certain circumstances, it may be possible to retain your policy with the current insurer if specific conditions are met. However, receiving a Notice of Non-Renewal generally means that you will need to find new homeowners insurance to replace your existing policy.
Homeowners Insurance Non-Renewals Happen Frequently
Homeowners insurance non-renewals happen more often then we think. Insurers often update their eligibility guidelines, or non-renew due to claims. It is common for insurers change their brush fire mapping criteria, which result in large numbers of residents in a particular neighborhood receiving non-renewals and being forced to find replacement homeowners insurance. Finally, in wildfire-affected areas where losses have already occurred, insurers will seek to reduce their exposure in those areas.
In 1994, after the Northridge Earthquake, many insurers withdrew from the California homeowners insurance market, leaving hundreds of thousands of non-renewed homeowners to find replacement coverage.
Over 10 days in November 2008, our neighborhood of Yorba Linda, California was tragically affected by the 30,000 acre Freeway Complex Fire, which resulted in the destruction of 187 homes in Yorba Linda and 127 homes in Anaheim Hills. Over one-third of Yorba Linda’s residents were forced to evacuate, along with residents of Anaheim Hills, Chino Hills, Corona, Diamond Bar, and Brea.
More recently, the wildfires in 2018 resulted in 1.8 million acres burned across California causing over $12 billion in insurance claims. When a catastrophic event like a wildfire occurs, insurance companies will often move to change their guidelines to reduce their exposure to brush fires. The Freeway Complex Fire was very disruptive to homeowners in Yorba Linda and Anaheim Hills, as many homeowners received non-renewal notices and were forced to replace the insurance company they may have been insured with for many years. A similar problem occurred in 2018 in communities affected by the Camp Fire, Carr Fire, Woolsey Fire, and Mendocino Complex Fire, among many others.
In October 2020 our neighborhood was again evacuated due to the Blue Ridge fire. Unfortunately one home was destroyed. It is a reminder of dangers of wildfires in our community that will certainly result in more non-renewals from homeowners insurance companies.
Tips When You Receive a Non-Renewal Notice
- Insurers will generally send non-renewal notices at least 60 days prior to the expiration of your homeowners policy. Be aware that starting the process early will help you obtain coverage, especially if you are in an area with wildfire risk. Do not delay!
- Contact your insurer or insurance agent to find out if there is anything you can do to prevent the non-renewal. Some insurers may retain your policy if you take specific steps to reduce risk for your property.
- Immediately begin looking for new coverage, regardless if your current insurer tentatively agrees to retain your policy.
- If you have an insurance agent, confirm with your agent if they can obtain replacement coverage with the insurers they work with. Some insurance agents may not be able to find replacement coverage.
- Be aware of the California FAIR Plan, which is available to every California homeowner as a last option for coverage. However, the California FAIR Plan is a limited policy and does not offer the coverage of a standard homeowners insurance policy. If it is necessary to obtain a FAIR Plan policy, you should also obtain a Difference in Conditions (DIC) or “wrap” policy to give you coverage comparable to a homeowners insurance policy.
Be Aware of Your Rights
In California, consumer protection laws are in place to prevent homeowners insurance non-renewals in areas where the Governor’s office has declared a State of Emergency. Under these laws, insurance companies cannot issue cancellation of non-renewal for wildfire risk for one year from the date of the emergency declaration for the affected zip code. More information about these consumer protection laws is available at the California Department of Insurance website.
The Advantage of an Independent Insurance Agent
Working with an independent insurance agent would be a great option in this situation. Independent agents work with many insurance companies that have a wide range of eligibility, so they can usually locate an insurer to write your home, even when your current insurance agent cannot. We were able to assist many homeowners in our Yorba Linda and Anaheim Hills area when they received non-renewals from their insurance companies as a result of the Freeway Complex Fire.
When speaking to an independent agent, provide them with the reason for the non-renewal notice that was provided by the insurance company. An efficient agent will ask for other insurance information to package the account for a multi-line discount. In some cases, bundling can bring a savings for all your insurance policies.
Once the agent has evaluated the dwelling cost with their carriers the broker will provide a few proposals along with an explanation of their differences and similarities and also comparing the proposals to the non-renewed policy.
Non-renewal notices can be alarming and confusing, but working with an independent insurance agent can make the transition painless. Please contact us if we can assist!