Homeowner’s insurance helps policyholders recover from loss in the event accidents or catastrophes–like fire, flood or burglars–damage or destroy the home. Like most types of insurance, coverage can be simple and straightforward or loaded with riders, supplements and add-ons. Each of these additions costs extra money, but no matter how much you are willing to pay for coverage, your application can still be refused for a variety of reasons.
Bad Credit History
Your personal credit history could prevent you from getting a homeowner’s policy. A low score equals higher risk according to insurance company actuaries and the Insurance Information Institute. If you are refused coverage, check your FICO scores for errors and inconsistencies that can flag a file and trigger a rejection. Illinois Legal Aid verifies this trend: “More and more insurance companies are checking your credit record when they decide whether or not to sell you homeowners insurance.”
You’re a High Risk
Terri Cullen, writing for the “Wall Street Journal,” has a vested interest in the topic of homeowners insurance coverage refusal: she made several claims and an adjuster advised her that she and her home could be labeled as a high risk because she made multiple claims. “Ã¢Â?Â¦ a bunch of small claims are viewed as more unfavorable than one big one,” confides Dave Dybhahl, president of the Environmental Risk Resources Association, so if you are refused coverage, s series of small claims could be the culprit.
Poor Structural Maintenance
Allowing a home to deteriorate due to neglect, lack of finances and other hardships can put your abode at risk of experiencing major infrastructure damage that begins as a small problem. If your home is subject to, for example, water intrusion that remains unattended or unchecked because you can’t afford a sump pump or plumber, your walls, electrical system, plumbing and foundation could break down and become the reason an underwriter refuses to rubber stamp your application for homeowners insurance.
Some insurance companies avoid paying health and damage claims resulting from mold by blacklisting them, literally and figuratively. You may not know your home has a history of mold damage until you are refused coverage. You can order a home report from either ChoicePoint or the Insurance Services Offices if you’re worried. Both keep histories of millions of insurance claims, including reports of mold. “There are no industry standards for mold remediation,” says Dybhahl, so expect an uphill battle if you know you have mold when you shop for coverage.
You Own a Dog
A common reason for a policy refusal can, sadly, be the family pet. Calls to the Massachusetts Society for the Prevention of Animal Cruelty arrive every day as homeowners seek alternate resources after being turned down for homeowners insurance. Pit Bulls, Rottweilers, Dobermans, German Shepherds–and, surprisingly, Golden Retrievers-are the most targeted breeds. The reason? Dog bite claims have become epidemic. Don’t give up. Check other companies if you’re refused coverage because of your pooch. Little dogs almost always get a free ride and many insurers-some in the industry’s upper echelon-are happy to cover even the big dogs.