What is the difference between having your insurance policy “cancelled” versus “non-renewed” and, does either impact your future ability to get insured?-Part Two

As noted in the previous post on this topic, there is a difference between being cancelled and being non-renewed. While being non-renewed is common, being cancelled is a negative scar on your insurance record, and may result in a battle between you and your insurance company. An insurance company may have a variety of reasons why they think they should cancel your policy, none of which may be true and are usually subjective. The most common complaint we hear from insureds is that they are cancelled because of “frequency of claims.” This drives insureds crazy, as most insureds only file claims when there are major issues to address (e.g. sinkhole claims). The problem with being cancelled is that to a future insurance company, a cancellation is a statement that you either did not do something you were supposed to do, or somehow your home was a sufficient problem and fell outside common underwriting guidelines. As most insurance companies use the same or similar guidelines, this would then be an issue for most insurance companies. I have seen homes cancelled for relatively minor and alterable reason (e.g. insurance company discovered a trampoline), or for more material, and disquieting bases (e.g. previous, unrepaired sinkhole not disclosed on application).

Frequently, cancellations will be used as a defense against a pending claim. If, for example, the insurance company discovers the presence of sinkhole or sinkhole activity, they may go back to the application after the claim is submitted to determine if there could be a reason to deny your claim. If they then discover something they believe to be a sufficient basis, they will then cancel your coverage and look to deny your claim. All this considered, cancellations are a fertile ground for arguments between insurance companies and their insureds. Read our tips on filing a sinkhole claim. Have a burning question you’d like to ask about sinkholes? Let us know.

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