What to Do if You Can't Get Homeowners Insurance Because of Your Claims History


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ByMark Fitzpatrick
Edited byRae Osborn
ByMark Fitzpatrick
Edited byRae Osborn

Updated: May 22, 2024

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Getting homeowners insurance may be challenging if your claims history impacts your ability to secure coverage. Still, you can explore alternative providers, seek an insurance agent or get a FAIR plan if this happens. While a history of multiple claims might limit your options with some insurers, it doesn't mean you're out of choices. Understanding these options can open doors to finding the coverage you need.

Key Takeaways

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Claims history can impact insurance eligibility, but options like FAIR plans and consulting agents can offer alternative solutions.

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FAIR Plans provide essential coverage for high-risk homeowners, ensuring access to basic insurance in challenging situations.

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Understanding various factors, including property condition and location, is crucial in securing and maintaining homeowners insurance.

Actions if You Can't Get Homeowners Insurance Because of Your Claims History

When your claims history hinders you from obtaining homeowners insurance, it's important to know the available actions to navigate this situation. These steps offer solutions that cater to diverse needs and circumstances, ensuring that every homeowner can secure the necessary protection for their property. Here are some actionable strategies:

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    Shop Around for Providers

    Different insurance companies have varying policies regarding claims history. Explore options with other insurers who may have more lenient policies. Some insurers also specialize in high-risk coverages.

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    Consult With an Insurance Agent

    An experienced agent can provide personalized advice and help find insurers that are more accommodating to your specific situation. Consult with an agent to clarify why you can’t get homeowners insurance.

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    Consider a FAIR Plan

    As a last resort, Fair Access to Insurance Requirements or FAIR Plans are state-mandated insurance pools for those who struggle to get coverage in the regular market.

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    Improve Your Home's Safety

    Implementing safety upgrades can make your home more appealing to insurers. This could include installing security systems, upgrading electrical wiring or reinforcing structures against natural disasters. Doing this can increase your chances of getting lower home insurance rates.

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    Review and Adjust Your Claims History

    Reviewing your claims history for inaccuracies and disputing errors can improve your insurance prospects. Make sure that all the claims there are made by you and if not, adjust it immediately.

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    Increase Your Deductible

    Opting for a higher deductible makes insurers more willing to offer coverage, as it reduces their risk. A higher deductible means lower insurance premiums. Make sure you balance between what you can manage to pay out of pocket and how much you can pay annually for your policy.

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    Build a Strong Insurance History

    Consider starting with a basic policy and gradually building a more positive insurance record by avoiding small claims and maintaining consistent coverage.

Fair Access to Insurance Requirements (FAIR) Plans

Fair Access to Insurance Requirements (FAIR) Plans provide a crucial safety net for homeowners who face difficulty obtaining insurance due to factors like a problematic claims history or residing in high-risk areas. These plans, established in the 1960s, are state-mandated insurance pools designed to ensure that all property owners have access to basic property insurance. Here's what FAIR Plans typically cover:

  • Fire Damage: Coverage for damage caused by fires, is a fundamental aspect of most FAIR Plans.
  • Smoke Damage: Protection against damage caused by smoke, often associated with fires.
  • Windstorm Damage: This includes damage from wind-related events, which is particularly relevant in areas prone to hurricanes and tornadoes.
  • Hail Damage: Coverage for damages caused by hail is a common concern in many regions.
  • Explosion: Protection against damages due to explosions, a less common but significant risk.
  • Riot or Civil Commotion: Coverage for damages resulting from riots or similar disturbances.
  • Aircraft Damage: Protects against damage caused by aircraft, which, while rare, is a potential risk.
  • Vehicle-Caused Damage: Coverage for damages caused by vehicles to the property.
  • Vandalism and Malicious Mischief: Protection against intentional damages caused to the property.

It's important to note that FAIR Plans are often seen as insurers of last resort and may offer more limited coverage compared to standard homeowners insurance policies. Homeowners are encouraged to consider FAIR Plans when other insurance options are not viable, ensuring some level of protection for their property.

How to Qualify for FAIR Plans

Qualifying for Fair Access to Insurance Requirements (FAIR) Plans is an essential consideration for homeowners who cannot secure traditional insurance. While these plans are designed for those deemed high-risk, not all high-risk homeowners are automatically eligible for coverage. FAIR Plans have specific criteria that must be met. The typical requirements include:

1
Proof of Insurance Denial

Applicants usually need to show they have been denied coverage by a certain number of insurers (often one or more).

2
Property Inspection

A satisfactory home inspection may be required to assess the condition and risks of the property.

3
Home Maintenance Standards

The property must meet certain maintenance and safety standards, such as having a sound roof and structurally secure walls.

4
Location Eligibility

Some FAIR Plans are only available in specific geographic areas, especially those prone to certain natural disasters.

5
No Outstanding Property Taxes

Homeowners must be current on property taxes and have no legal disputes regarding property ownership.

6
No Fraudulent Insurance Claims History

A history free of fraudulent insurance claims is often a prerequisite.

Homeowners must understand that each state may have different requirements and processes for FAIR Plans. These variations reflect the unique risk profiles and regulatory environments of different regions. Homeowners are advised to research and consult with insurance professionals in their state to understand the specific eligibility criteria and application process for FAIR Plans, ensuring they can make an informed decision about their property's protection.

Why Would Your Claims History Affect Your Eligibility for Home Insurance?

Your claims history can affect your eligibility for home insurance because insurers view a history of frequent or costly claims as an indicator of higher risk. This history suggests a greater likelihood of future claims, leading insurers to perceive you as a riskier client, potentially resulting in higher premiums or denial of coverage. Insurers rely on past claims to predict future risk and calculate premiums accordingly.

Other Reasons You May Be Rejected for Homeowners Insurance

Your claims history isn't the only factor that can lead to rejection when applying for homeowners insurance. Various other elements, such as the condition of your property, its location and even certain personal factors, can influence insurers' decisions. Here are other reasons why you might face challenges in obtaining homeowners insurance:

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    Location in High-Risk Areas

    Properties located in areas prone to natural disasters like floods, earthquakes, or wildfires often face higher scrutiny. Insurers may view these homes as high-risk investments due to the increased likelihood of significant damage.

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    Age and Condition of the Property

    Older homes or those in poor condition are more susceptible to structural issues, plumbing failures, and electrical problems, posing a higher risk for insurers. Homes with outdated features, such as old roofing or heating systems, are particularly challenging to insure.

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    Presence of High-Risk Features

    Certain property features, like swimming pools, trampolines, or aggressive dog breeds, can increase the likelihood of liability claims. Insurers might be hesitant to provide coverage or might charge higher premiums for homes with these features.

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    Poor Credit History

    Insurance companies often use credit history to indicate a potential policyholder's risk level. A low credit score or a history of late payments can be seen as a sign of financial instability, making insurers wary of providing coverage.

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    Lapse in Previous Homeowners Insurance

    A history of lapses in homeowners insurance coverage can be a red flag for insurers. It suggests a pattern of risk management that insurers might find concerning.

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    Frequent Small Claims

    Filing multiple small claims in a short period can indicate a higher risk of future claims, leading insurers to reconsider offering coverage.

Understanding these factors can help homeowners take proactive steps to improve their chances of obtaining insurance, such as maintaining their property, managing personal risks, and addressing any specific issues that might make their home less appealing to insurers.

FAQ

Homeowners insurance can be challenging, especially regarding factors that affect your policy eligibility and terms. These frequently asked questions tackle important topics like what could make you uninsurable, whether an insurer can refuse to renew your policy, and why your claims history matters. We answered these questions to help simplify these concepts, making it easier for you to understand and manage your homeowners insurance.

What makes someone uninsurable?
Can an insurer refuse to renew?
Why does my claims history affect my ability to get homeowners insurance?

Read More

About Mark Fitzpatrick


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Mark Fitzpatrick has analyzed the property and casualty insurance market for over five years, conducting original research and creating personalized content for every kind of buyer. Currently, he leads P&C insurance content production at MoneyGeek. Fitzpatrick has been quoted in several insurance-related publications, including CNBC, NBC News and Mashable.

Fitzpatrick earned a master’s degree in economics and international relations from Johns Hopkins University and a bachelor’s degree from Boston College. He is passionate about using his knowledge of economics and insurance to bring transparency around financial topics and help others feel confident in their money moves.