Homeowner’s insurance coverage is designed to protect your finances if a catastrophe befalls your biggest asset. It can help you recover from unexpected—and expensive—damage to your home, and most lenders require you to purchase it before they will close on your loan.

If you’ve been dropped by your homeowner’s insurance company, you may run the risk of being entirely responsible for the cost of a natural disaster or theft, which can be financially devastating for most people. To help protect yourself, learn about when and why your policy can be canceled and what to consider if it is.

When can your homeowner’s policy be canceled?

There are two reasons that your homeowners policy can be canceled: unpreventable reasons and preventable reasons.

Unpreventable reasons represent circumstances outside your control. Your insurance company might stop offering coverage in your area or state, or the insurer might decide to stop covering certain types of homes. Your insurer might start limiting the number of policies in one geographic area, or even stop offering the home line of coverage altogether.

Preventable reasons for canceling your homeowners coverage are items that you are largely responsible for. Ron Hettler, president of Hettler Insurance Agency and a certified insurance counselor, lists some preventable reasons that your homeowners policy might be canceled:

● Aggressive pets that bite or otherwise injure others, and that aren’t restricted in movement and kept away from neighbors and visitors.

● The homeowner fails to comply with safety guidelines regarding items on the property, such as trampolines and pools.

● Evidence that the home is rundown (high weeds, peeling paint, worn-out roof), or the presence of safety and fire hazards.

● Regular claims against the policy to the point that the insurance company feels that your risk profile has increased. This number varies by insurance company.

Your policy can be canceled for specific, serious reasons, such as failure to pay your premiums, an instance of fraud, or a significant change in your risk profile.

Keep in mind that this is not an exhaustive list. Check with your insurance provider to understand what else may trigger a cancellation.

When you are dropped at the expiration of your policy term, it is technically a nonrenewal, not a cancellation. This can be the result of your home being in a high-risk area or due to specific types of claims that were filed.

The process of cancellation will vary from state to state. You should receive notice of the cancellation, but when you receive it depends on the state in which you live. The information contained in the notice also will vary.

“In Wisconsin, a company can cancel a homeowner’s policy within 60 days of the new insurance application without providing the consumer with a reason for the cancellation,” says Deborah Becker, a 20-year veteran in the industry and the owner of Deborah Becker Insurance & Financial Services. “Other states might have other requirements.”

Becker recommends getting help in learning the state laws related to cancellation so that you understand the process and can file an appeal (if you have the grounds to do so).

What can you do if your policy is canceled?

If your insurer provides you with an explanation for the cancellation, you might have time to make changes or repairs before your coverage is completely ended, depending on the state law. Removing an aggressive pet from your home or taking down a trampoline might make a difference, but not all problems can be as easily resolved.

“Some companies believe that if the house deteriorated under a homeowner, fixing it up won’t prevent the deterioration happening again,” notes Hettler. “In those cases, you might not get your company to reinstate.”

If you can’t convince your insurer to give you another chance, it’s time to shop around. It might not be easy because many insurers will want to assess your risk before approving a policy, and that means you might have to explain why your previous company dropped you. “Usually, the new private carrier will have the same objection to hazards or conditions that caused the previous cancellation,” explains Becker.

Even with the difficulty, though, it’s possible to purchase replacement coverage, but you may have to pay higher premiums to find a company willing to insure you because you are considered a higher risk. “You can also see if it’s possible to buy a restricted policy with an exclusion for the offensive characteristic, such as an animal exclusion,” he says.

If you continue to have trouble finding coverage, you may want to find out if your state offers the option of a residual market program. In such programs, policyholders are part of a “pool,” sharing the responsibility for premiums, losses, and expenses. These plans are particularly helpful for those consumers who are considered high risk or who have high-risk properties. Becker recommends contacting your state’s insurance regulator to find out if your state offers such a plan.

Because insurance regulations vary from state to state, you will need to learn more about your state’s guidelines for obtaining homeowner’s insurance. If you need help, consult with an insurance professional or a knowledgeable attorney who can explain and help you understand your options.

Miranda Marquit is a freelance journalist specializing in financial topics. Read more of her writing on Huffington Post, Wise Bread, AllBusiness, and at her website, Planting Money Seeds. Follow her on Twitter: @MMarquit

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