Cancellations and Non-Renewals
Under the present law in New York State, an insurance company may generally cancel your homeowners or tenants policy by issuing a cancellation notice during the first 60 days it is in effect as long as the cancellation notice states the specific reason or reasons for the cancellation.
After your policy has been in effect for 60 days it may not be cancelled or non-renewed for a three-year period, except generally for the following reasons:
- nonpayment of premium (however, if payment is received by the company within 15 days of the mailing of the cancellation notice the policy will not be cancelled);
- conviction of a crime arising out of acts increasing the hazard insured against;
- discovery of fraud or material misrepresentation in obtaining the policy or in the presentation of a claim under the policy;
- discovery of willful or reckless acts or omissions increasing the hazard insured against;
- physical changes in the property occurring after issuance or last annual anniversary date of the policy which result in the property becoming uninsurable in accordance with the insurance company’s objective, uniformly applied underwriting standards in effect at the time the policy was issued or last voluntarily renewed; or
- a determination by the Superintendent that the continuation of the policy would violate or would place the insurer in violation of the Insurance Law.
At the end of this three-year period, your company may refuse to renew your policy.
By law, any notice of nonrenewal must be provided at least 45 days, but not more than 60 days, prior to the expiration date of the policy.
A homeowners insurance policy is purchased to cover sudden and unexpected large losses. Homeowners should be careful about filing multiple small claims over a short period of time, as some carriers have restrictions on the number of claims you can file before you are designated a higher risk customer, which may result in your homeowners policy being non-renewed.
The decision to file a claim for damage or a loss that is covered under your policy is up to you, but when it comes to minor damage you may want to consider paying for repairs out-of-pocket.
Tips for Avoiding Non-renewal
Consider carrying a higher deductible. This will save you money on your premium and discourage you from filing multiple small claims.
Perform regular home maintenance. Preventing damage from typical in-home mishaps that can be easily avoided may save you from future risk.
Learn your home's claims history. If you are buying an existing home, find out what claims have been filed in recent years. Water loss claims, for example, can impact whether the property is considered higher risk. Before purchasing a property, you can request that the current owner of the property order a Comprehensive Loss Underwriting Exchange or CLUE report. A CLUE report is generated by a claims history database managed by LexisNexis® and enables insurance companies to access consumer claims information when they are underwriting or rating an insurance policy.
If Your Homeowners Policy is Non-Renewed
There is a difference between cancellation and non-renewal. An insurer cannot cancel a policy that has been in force for more than 60 days except:
- If you fail to pay the premium.
- If you have committed fraud or made serious misrepresentations on your application.
Non-renewal is a different matter. Either you or your insurance company can decide not to renew the policy when it expires. In New York, an insurance company must give you 45 – 60 days notice and explain the reason for non-renewal before it drops your policy. If you want a further explanation, call the insurance company. If you think the reason for non-renewal is unfair, you can file a complaint with the Department of Financial Services.
Your company may have decided to drop a particular line of insurance or to write fewer policies where you live, so you shouldn't necessarily think the non-renewal is because of something you did. On the other hand, if you did do something that raised the insurance company's risk considerably, like committing fraud, your policy may not be renewed.
If your insurance company did not renew your policy, you will not necessarily be charged a higher premium at another insurance company.