What legal remedies do homeowners have when their insurers try to cancel policies or refuse to renew them?
Some insurers in South Florida do not want more business. In areas with higher than average claims, a few large property and casualty insurance companies are, instead, trying to cancel homeowners insurance policies and declining to renew coverage.
Some Insurers Seek to End Policies Before the End of Their Terms
An insurance industry CEO claims that one company is trying to cancel 9,000 policies in the middle of their terms, while another is hoping to drop 8,000 policies. Others have similar plans. Those that are not seeking to drop customers mid-term are limiting new policies and renewals, in some cases changing eligibility criteria to ensure that fewer applicants qualify. Some block certain zip codes or refuse to insure older, less expensive homes. Higher minimum coverage requirements — e.g. $500,000 for houses more than 5 years old — can prevent owners of more modest homes from buying insurance. One South Florida insurance agent claims her office is surrounded by homes that are ineligible for coverage.
Policies Contain Clear Rules and Procedures for Termination
Most homeowner’s policies contain endorsements setting forth the rules for cancellation or non-renewal, such as notice requirements and other conditions that must be met. Cancellation of a policy in mid-term is not common, though it can occur, especially when a homeowner has filed a number of very costly claims in a short period of time.
Non-renewal of a policy at the end of its term is much more common and, unfortunately for policyholders, the conditions for non-renewal are usually less strict than those for cancellation. Homeowners usually receive a letter explaining the cancellation. Once their policies have been terminated, homeowners may have difficulty finding a new insurer to take on the risk.
Policyholders who believe an insurer has terminated a policy improperly or unfairly should not give up but should, instead, consult with an attorney about contesting the decision. An experienced insurance litigator can help you ascertain whether your insurer has met all of its legal obligations and satisfied all of the requirements for cancellation or non-renewal.