Cancellation vs. Nonrenewal and Homeowners Insurance

As with any insurance policy, there is a big difference between cancellation and nonrenewal.

Your homeowners’ insurance policy can be cancelled by you or your insurance company. For example, if you sell your house during the policy’s term, you will no longer need homeowners’ coverage. You would then need to cancel your policy and the insurance company would refund any pre-paid premiums.

If you fail to pay your premiums or misrepresented yourself when you opened the policy, the insurance company will cancel your policy. It’s possible you may be able to restart coverage even after you made late payments but your premiums may be higher.

On the other hand, if the insurance policy’s term ends and you decide to go with a homeowners insurance policy from a different company, you can simply not renew the policy. You still need to inform your current company that you don’t wish to renew though so they don’t automatically do it for you.

Of course, the insurance company could choose to not renew for a number of reason such as a high number of claims or it simply becomes too expensive to insure in your area. If the company does decide not to renew your policy, they must do so in writing before you make a payment towards the new policy term.

If the homeowners insurance company doesn’t give you a reason for not renewing, you can request an explanation by contacting the company by phone or writing.

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