What Happens If You Can't Get Homeowners Insurance?

So, what happens if your application for home insurance is denied? The list of potential disqualifiers is a helpful starting point for determining why the insurance provider found you or your property ineligible for coverage. In some instances, you may be able to resolve the issue that led to your denial. However, other concerns could be difficult or impossible to overcome.

If you have been denied coverage but do not wish to stay uninsured, you can pursue the following actions:

1. Consider Other Insurance Companies

You could begin your search for a homeowners insurance policy by applying to various insurance providers. When trying to obtain insurance coverage, it is often advisable to search around. An agent can help you compare prices from multiple insurance companies.

Unfortunately, if one insurance provider declines your coverage, you will likely have the same issue with other insurers. However, insurance firms may have different requirements, and some may offer plans tailored to high-risk customers.

2. Communicate With Neighbors

If your home's location prevented you from obtaining homeowners insurance, an excellent method is to speak with your neighbors to see how they insure their properties. Since their residences are vulnerable to the same area threats as yours, such as high crime rates and severe weather, they are a valuable resource.

Contact their insurance providers to determine whether you can obtain coverage from them. Your real estate agent can also determine which insurance company the prior homeowners utilized.

3. Consider Surplus Line Insurance

Typically, your state grants insurance companies a license to sell you coverage. Nonetheless, this is not the case with excess insurance providers. This does not imply that these businesses are not licensed.

Rather, they are licensed by the state where the business is headquartered. Because they are not subject to your state's restrictions, these businesses are free to charge greater premiums for less coverage. Due to the high price, this choice is not optimal.

4. Talk To An Independent Insurance Agent

A conversation with an independent insurance agent can be incredibly beneficial if you want to understand why you're having problems obtaining coverage and what you can do to overcome these obstacles.

These agents are educated about the aspects that can affect your eligibility for homeowner's insurance, making them a valuable resource. In addition, these agents often work with numerous insurers, so they will be able to examine your alternatives quickly and may be able to direct you to a company that will insure you.

5. Contact Your State's Insurance Commission

Your state's insurance department is an additional resource. They should be able to advise you on which insurers in your area are suitable for high-risk clients. The Missouri Department of Insurance is where Missourians should go. They can also inform you if your state participates in the Fair Access to Insurance Requirements (FAIR) Plan and directs you to various insurance providers. Missouri is a member of the FAIR Plan.

6. Sign up for a FAIR Plan

FAIR Plans are intended as a last choice for individuals who have been rejected homeowners insurance coverage on the voluntary market, particularly those who reside in high-risk areas. FAIR plans are more expensive and provide less coverage, which is why they are the last alternative. However, they provide just enough coverage to satisfy your mortgage lender's insurance needs.

Although FAIR Plans exist outside the voluntary market, you must enroll through a regulated insurer to obtain coverage.