As an independent agent providing insurance coverage to homeowners in Comal County, Bexar County and the San Antonio Texas area, we often answer questions from confused homeowners who don’t understand their rights as homeowners, and what insurance companies can legitimately do when it comes to cancellation or non-renewal of home insurance policies.
Cancellation and Non-Renewal are two entirely different things. We think it is essential that you be as well-informed as possible, and that you know your rights and recourse.
CLUE is an acronym for Comprehensive Loss Underwriting Exchange. It is an archive of records of insurance claims for both people and houses regardless of whom the owner was, for the past seven years. The law only allows companies to report information on filed claims. Federal law protects homeowners by allowing them to challenge falsely reported information.
If an insurance company uses a CLUE report to deny you coverage (either through cancellation or non-renewal,) you are entitled to a free copy of the report from LexisNexis Personal Reports. Before calling to ask for the report, look for the denial number on the letter you got from your insurance provider, or call your company to get that number.
Cancellation happens if your coverage stops before the policy’s expiration date. It doesn’t matter whether you start the cancellation, or your insurance company does it. In either case, the company has to refund your unearned premium – the amount of money you paid in advance for premiums, and did not get. If your annual premium is $600, and the policy is canceled after a month, your insurance company has to give you back $550.
If an insurance company intends to cancel your policy, the law requires the company to contact you in writing no less than 10 days before cancellation. A company can only cancel your policy if you fail to show evidence of a risk for which there is no record of an earlier claim, within 60 days of issuing the policy. If the company decides to cancel the policy more than 60 days after date the policy went into effect, they must give you 30 days advance notice – in writing. The only legitimate reasons for canceling a policy more than 60 days after it starts are fraud, non-payment of your premiums, and evidence of an increased risk.
Non-renewal happens when the company refuses to renew your policy once it expires. Texas law requires the company to send you written confirmation of their intention not to renew the policy, at least 30 days before the policy expires. If the company fails to inform you at least that far in advance, they have to renew the policy if you ask them to do so.
Reasons for Non-Renewal
If you neglect the home and it falls into disrepair, or it is in very bad shape, regardless of the reason it got that way, the company can give you an ultimatum as a condition of renewal. That ultimatum is usually a time limit for making those repairs.
If the home is in bad shape because of damages or a loss that is covered by your policy, the company has to pay for any repairs, minus the amount of your deductible. If the repairs are the result of normal wear and tear, or deterioration from age, you are responsible for the entire cost.
Another legitimate reason for non-renewal would be a situation where you file three or more claims in 3 years or less, for situations that aren’t related to weather catastrophes. Before a company can opt not to renew your homeowners insurance because of non-weather related claims, however, they must contact you AFTER the second claim, issuing a warning. If the company fails to issue that written warning after you file a second non-weather-related claim, the have to renew your policy.
Your insurance company cannot legally use the first two appliance claims to decide how many non-weather claims they will allow, as a defense for non-renewal. The company cannot legally refuse to renew your policy because you file a claim for a non-covered loss. If you do file a claim for a non-covered loss, or if you file more than two non-weather-related claims the previous year, the company can issue a surcharge, or an additional premium as a condition of renewal.