Home insurance is such an integral part of homeownership that many homeowners don’t consider the possibility they may be denied a homeowners insurance policy. Homeowners insurance ensures you’re complying with your mortgage lender’s requirements and safeguarding your home against covered perils.
As a new homeowner, you may face a seemingly devastating situation — ineligibility for homeowners insurance. But even if an insurance company denies you this essential coverage, this doesn’t mean you’re out of options. At David Pope Insurance, we help homeowners in Missouri and nearby states get the coverage they need to protect their homes.
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Home is where the heart is, but that’s not the only thing that makes your home valuable. For many people, their home is their most valuable financial asset. It makes sense, then, that you would want to protect it. The vast majority of American homeowners have homeowners insurance. Homeowners insurance is not something you are legally obligated to purchase. However, most homeowners see it as an indispensable form of protection.
Homeowners insurance protects you financially from potential damage to your home or personal property and from potential liability issues if someone were to experience an injury or loss of property while at your home. Even if these important protections aren’t enough to motivate a homeowner to purchase insurance, they may still opt to purchase it because mortgage lenders often require it.
If you are a homeowner or are considering becoming one, it’s good that you’re taking the time to consider homeowners insurance. This post will look specifically at the many factors that can affect your eligibility for homeowners insurance. If you’re not sure whether you would qualify or if you’ve already been denied for a policy and want to find out why, this post is for you. We’ll look first at what homeowners insurance is and what makes it valuable. Then, we’ll look at basic aspects of eligibility, what can disqualify you, what can affect your premium rates and what to do if you are denied.
What is homeowners insurance exactly? Sometimes shortened to just “home insurance,” homeowners insurance is meant to protect against the financial ramifications of unfortunate situations — typically referred to as “perils” by insurance companies — that could negatively affect your home or your property.
When you experience one of these situations, you file a claim with your insurance company. If they determine the claim is valid, they will issue you the funding to cover the expense. However, you will still have to pay a certain amount of money out-of-pocket, which is known as the deductible.
Exactly what your insurance will cover depends on the terms of your policy. Common policy levels are HO-2, HO-3, HO-5, HO-6, HO-7 and HO-8. These different levels entail different types of perils and other scenarios that are covered by your insurance company.
Though different homeowners insurance policies will offer you different levels of coverage, generally speaking, homeowners insurance protects against the following perils:
While we tend to think of homeowners insurance in terms of perilous situations it will cover, there are also more routine situations where homeowners insurance proves to be valuable. For example, if your city, county or state modifies property regulations, you may find yourself in a position where you need to bring some aspect of your home or property up to code. Depending on your policy, your homeowners insurance may pay for these mandatory updates.
It’s also important to note what homeowners insurance does not cover. The main categories that aren’t covered by a normal homeowners insurance policy are earthquakes and floods. These natural disasters require separate insurance policies if you want to be protected financially from the damage they could cause.
Missourians should consider both of these additional types of insurance since the state has experienced some serious flooding in the past and because the state’s proximity to the New Madrid Seismic Zone makes it susceptible to an earthquake.
Now that we’ve established what homeowners insurance covers, it should be clear why the majority of homeowners see purchasing home insurance as a wise move. As with other types of insurance, though, the decision to purchase is just the beginning.
You must then go through an application process to see if you qualify. Simply owning a house isn’t enough to make you eligible for homeowners insurance. As we will see in the next section, there are many things that could affect your eligibility.
The application you fill out will ask you for basic personal information along with information about your home. Be sure to be completely honest on your application, as fraud is a serious offense. Here are a few examples of the information you’ll be asked to provide about your property:
You will also be asked whether you’ve had homeowners insurance in the past. Your history as a homeowners insurance policyholder can affect your eligibility for future policies. Of course, if you have never purchased homeowners insurance before, you won’t have to worry about that section. Finally, expect to answer some questions about the level of coverage you would like. Different policies cover more or less and carry with them proportionally lower or higher premium costs.
You can also expect to undergo an inspection by someone the insurance company sends. This will help them establish what sort of shape your home is in and any potential hazards they should be aware of. If there are any maintenance issues you intend to fix, it’s a good idea to get these taken care of before your inspection. That way, they won’t get in the way of you getting coverage or cause your premium rates to be higher than necessary.
Meeting qualifications for homeowners insurance can sometimes prove to be an issue. Just owning a home and being able to afford home insurance isn’t enough to make you eligible. There are a variety of factors that could make you ineligible for homeowners insurance. While some have to do with your own candidacy as a policyholder, most factors have to do with your property itself. Low insurance scores, criminal convictions, lapsed coverage, your history of claims, and other reasons can disqualify you for homeowners insurance candidacy.
Let’s take a look at six different things that can disqualify you for homeowners insurance.
Part of how insurance companies determine your risk level is by looking at your credit-based insurance score. Like a credit score, this score is based on your credit history. It’s meant to give the insurer an idea of how likely you are to file claims. People with lower insurance scores tend to cost insurance companies more.
The practice of looking at someone’s credit history is based on actuarial studies that demonstrate that the way a person handles their finances is a reliable means of predicting insurance claims. While in some cases, a less-than-desirable insurance score will mean you have to pay higher premiums, if it’s bad enough, you may be denied coverage altogether.
An insurance company must assess whether a potential policyholder would be responsible and trustworthy or not. Unfortunately, if you have a history of criminal offenses, this could hurt your chances of qualifying for an insurance policy. This is especially true if the crime you committed was related to arson, some other type of property destruction or misusing property for an illegal purpose. If the crime you committed was in the distant past, then it is far less likely to affect your eligibility than if it was recent.
If you have been a homeowners insurance policyholder before and let your coverage lapse, that could hurt your chances of getting homeowners insurance in the future. Your coverage could lapse because you forget to pay your premium or because you forget to renew your policy on time.
If you attempt to buy insurance from the same insurer after letting your coverage lapse, you could be denied. At the very least, you’ll have your premiums raised. If you try to purchase homeowners insurance from another carrier, you may have trouble as well.
Insurance companies must predict whether a policyholder will cost them less than or more than average. Policyholders who don’t file claims or file very few are the reason insurance companies can make money and stay in business. Therefore, if an applicant has a history of filing excessive insurance claims, that applicant won’t look very attractive to an insurance company since they are likely to be an expense. The Comprehensive Loss Underwriting Exchange keeps track of these insurance claims.
It’s important to note that it isn’t just the number of claims, but what types of claims were filed that can affect you. For example, claims related to lawsuits, such as from a dog bite or a safety hazard that caused injury to someone, will raise red flags. Even if you do not have a history of filing a lot of claims, you could still run into problems if the previous owners of your home filed claims. In other words, you may not be high-risk, but your house may be. We’ll look at several ways your property itself can be high-risk in the remaining items in this list.
If you work from home, your home may also be considered a place of business. This is especially true if you run a business out of your home that involves clients coming to your home for business purposes. Depending on the nature of your work, insurance companies could refuse to issue you a homeowners insurance policy. If this is the case, it’s because you should purchase a business policy instead.
A business policy would cover your property related to your business, whereas a homeowners insurance policy would only cover your personal property. In some cases, you may be able to purchase homeowners insurance but will need to pay for additional coverage for business property, such as a computer.
There are plenty of situations that could result in your home being left empty for a time. It could be that you’re living elsewhere while your home is being renovated. You could be leaving on an extended vacation. Or, perhaps, you consistently live in another home in a different climate for part of the year. Whatever the reason, if your home is left vacant part of the time, that creates a high-risk situation for insurance companies.
After all, if you’re not there, something like a burst pipe or a fire could go unnoticed long enough to cause more serious damage than if you’d been there to stop it. Another issue is that squatters may attempt to move into your home if it’s left empty for too long. Insurance companies are wary of these potential hazards and may choose to deny you coverage.
Insurance providers want to ensure they’re not taking on too much risk by insuring your property. If the insurer determines the risk is too great, they may reject your application for insurance coverage or cancel your current policy.
In this case, an insurance provider is essentially declaring your property uninsurable. Though providers may vary on the criteria used to determine whether a home is uninsurable. Living in a high-risk location, having hazardous home features, home maintenance issues, your home’s history of insurance claims, and more can be reasons an insurance company may determine a house to be uninsurable.
If your home is in a high-risk location, that could make you ineligible for homeowners insurance. What makes a location high-risk? It could be that your home is located in a neighborhood that experiences a lot of crime. If so, an insurance company will be wary of the fact that you may incur property damage from vandalism or theft. If you live too far away from a fire station or fire hydrant, that could also disqualify you.
The weather hazards you experience where you live could also make getting insurance more difficult, or at least, more expensive. Weather issues could involve being located in a flood plain or an area that is prone to tornadoes. In areas that are prone to certain natural disasters, like hurricanes, you may have the opportunity to purchase a separate policy to cover that hazard.
Even if the location of your home doesn’t involve any unique dangers, your property itself might. Here are a few examples of hazardous home features to consider:
In some cases, these hazardous home features may just result in higher premiums, but if your home has enough hazardous features, they could also cause an insurance company to deny you coverage.
A big reason an insurance company may decide you’re ineligible for homeowners insurance is if your home is in disrepair. Maintenance issues could include a whole host of problems, such as the following:
Even if your home doesn’t have “maintenance issues,” a dirty or cluttered house can also disqualify you from insurance. Hoarding is a common compulsion among homeowners. In some instances, it can lead to underlying damage like mold growth or block paths and exits within the home. These situations constitute a hazard that an insurance company would more than likely use as proof that a home is uninsurable.
An insurance company will have an inspector come to your home to look for these sorts of issues. If the insurance company has already issued you your policy, then these maintenance problems will result in higher premiums for you. If the insurance company performs the inspection before issuing your policy, they could decide to deny you coverage if they see your home as high-risk. The good news is that these issues can be repaired.
In some cases, it isn’t home neglect that’s the issue, but simply the home’s age. Older homes experience more problems, generally. This is true of every home, but if you own a modular or trailer home, it’s especially true. These homes are not designed to last as long as most houses that are built on foundations.
Some insurance companies will have a hard-and-fast policy that denies coverage of mobile or modular homes that are of a certain age. This age cutoff depends on the insurance company. It could be a decade or as low as just a few years.
Mobile homes, trailers and other modular homes in general can constitute a bigger risk in the eyes of some insurance companies. Many mobile homes are factory-made en masse. Since manufacturers work with many homes at a time, they open themselves up to issues within the assembly line that get missed or looked over. Then, those mobile homes are usually transported to their final destination, during which time they risk even more damage. This damage may not be noticed until it’s too late.
Similar to your own claims history, an insurance provider will look at the history of claims for the property. Before you purchase a property, check whether there have been insurance claims made. If a previous owner has made insurance claims on the property, review what the claims were for.
Sometimes, a claim may indicate an underlying structural issue with the home that put the previous occupants at risk. This could present a risk to you as a potential resident and may make the insurer deny coverage. Additionally, if the home has a history of multiple insurance claims, the insurance company may deem the home to be too risky for coverage.
A house that has substandard or poor construction could also make a home uninsurable. When the construction is sub-standard or the foundation is weak, the house may show visible signs of damage. As such, the home will be both uninsurable and unsafe to occupy.
These homes raise liability concerns and are more likely to result in frequent claims. Many insurance providers will find the risk too great and deny home insurance coverage for a poorly constructed home.
Similar to poor construction, poor remodeling may make a home uninsurable. While remodeling can increase a home’s value, if the renovations are performed improperly, the house may be rendered unsafe. The insurance provider will want to know that the remodel meets building codes and doesn’t compromise the property’s electrical wiring or plumbing. If the remodeling is determined to be substandard, the insurer will likely deny you a home insurance policy.
When you have a pet, it takes up a big part of your life. Your pet can also affect your home, especially when you’re potty training it or you have an anxious or aggressive pet that takes things out on its surroundings. Because of that, many insurance providers consider pets a liability that factors into your eligibility and premiums.
For example, a small female cat or a golden retriever may be less of a liability than a male cat who sprays or a pitbull, as the perception is that these pets are more uncontrollable. If the pet has an existing record of attacking others or damaging property, it may be denied altogether. Furthermore, exotic pets like snakes can pose liability concerns. You may need to get insurance for your pets before a home insurance provider even looks at your application.
Premiums are the ongoing payments you make in exchange for your homeowners insurance coverage. These payments are typically made either monthly or annually. The average annual premium for homeowners insurance in Missouri was $1,300 in 2021, which is about equal to the national average. Your premium rate is set based on a variety of factors, but we can boil it down to two main categories:
There are several factors that can lead to higher homeowners insurance premiums. One is a higher level of coverage. However, there are also other factors that can raise your risk level, and therefore, your premiums. We previously looked at six things that could possibly disqualify you from receiving homeowners insurance coverage. With each of these six issues, if an insurance company chooses to issue you an insurance policy anyway, you can expect to pay higher premiums.
To review, these factors include:
An additional factor to consider is potentially dangerous pets. If you own an exotic pet or certain breeds of dogs, you can face higher premiums. Why? When discussing what homeowners insurance covers, we mentioned that it can protect you from costs related to your pet biting someone. That means if your pet is a breed that is considered more aggressive, such as a Pit Bull or a Doberman Pinscher, insurance companies will consider them higher risk. If your pet has a history of biting people, you may not receive liability coverage for them at all.
Just as there are factors that result in higher premiums, there are also factors that can result in lower premiums. These factors include:
In the end, your premium will be based on your desired level of coverage along with a complex combination of risk factors, both negative and positive, that you and your property entail.
So, what if you apply for homeowners insurance, and you get denied? The list of factors that could disqualify you is a good place to start to determine why the insurance company deemed you or your property ineligible for insurance. In some cases, you may be able to fix the issue that caused you to be denied. Other issues, however, may be difficult or impossible to resolve.
Here are some different steps you can take if you’ve been denied coverage and do not want to remain uninsured:
The first thing you might try is simply applying for a homeowners insurance policy with other insurance carriers. Generally, it’s always a good idea to shop around when you’re looking to purchase an insurance policy. An agent can help you compare quotes from different insurance companies.
Unfortunately, if one insurance company denied you coverage, chances are you’ll run into the same problem with other companies as well. However, some insurance companies may have different standards, and some offer plans that are especially for high-risk individuals.
If your home’s location was a determining factor in keeping you from getting homeowners insurance, a good strategy is to talk to your neighbors to see how they managed to ensure their homes. Since their homes are subject to the same local hazards, whether it be high rates of crime or weather-related issues, they are a good resource for you.
Contact the insurance carriers they use to see if you can purchase a policy from them. You can also have your real estate agent check into what insurance carrier the previous homeowners used.
Typically, insurance companies are licensed by your state to sell you insurance. However, this is not the case with companies that provide surplus insurance. That doesn’t mean these companies aren’t licensed at all.
Rather, they’re licensed by the state where the company operates from. Because they aren’t subject to your state’s regulations, these companies have the liberty to charge higher rates for less coverage. Because of the high cost, this option is not ideal.
If you want some insight into why you’re having trouble getting insured and what you can do to overcome these hurdles, talking to an independent insurance agent can be extremely helpful.
These agents are knowledgeable about the factors that can affect your eligibility for homeowners insurance, so they can be a great resource. Additionally, these agents typically work with multiple insurers, so they will be able to quickly evaluate your options and may be able to steer you toward a carrier who would insure you.
Another great resource is your state insurance department. They should be able to offer you guidance on which insurers in your area are good options for high-risk individuals. For Missourians, the Missouri Department of Insurance is where you want to go. In addition to guiding you to different insurance carriers, they can tell you if your state participates in the Fair Access to Insurance Requirements (FAIR) Plan. Missouri does participate in the FAIR Plan.
FAIR Plans are meant to be a last resort for people who have been denied homeowners insurance coverage in the voluntary market, primarily those who are located in high-risk areas. FAIR Plans tend to be more expensive and offer minimal coverage, which is why they are the last resort, but they offer just enough coverage to help you meet your mortgage lender’s insurance requirements.
Though FAIR Plans exist outside of the voluntary market, to enroll in a FAIR Plan, you’ll go through a licensed insurer who can get you coverage.
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No, it’s not illegal to not have home insurance. However, owning an asset as valuable as a home without insurance is assuming significant financial risk. Additionally, you likely won’t qualify for a mortgage without home insurance. For their own financial protection, many mortgage lenders require borrowers to carry homeowners insurance.
Your lender wants to know their investment is protected in the event of a covered peril, such as a fire, tornado or hurricane. Homeowners insurance ensures you and your lender are safeguarded against a financial loss should damage occur to the property. Even if you opt to purchase a condominium or a co-op, you may be required by the board to carry homeowners insurance to help protect the entire complex financially.
Once you pay off your mortgage and are no longer required by a lender to carry insurance, you may be tempted to forgo coverage. But your home could be your most valuable asset, and with a homeowners insurance policy, you can insure your belongings and gain protection against liability in the event of a property damage or injury lawsuit.
A home is a significant investment of your money and time and your source of shelter. Safeguarding yourself against financial risk should something happen to your home is essential, regardless of whether you have a mortgage or you own your home outright.
Once you purchase an insurance policy, usually, the insurer is at liberty to cancel the plan if they want within the first 60 days. After that, there are very few instances where they can drop you during the duration of your policy. However, when it comes time to renew your policy, typically after one year, your insurer can decline to renew your policy. The insurance company should give you at least a month or two’s notice before dropping you. If they don’t, contact your state insurance department.
You want to make sure you hold on to your homeowners insurance policy during those first couple of months after purchase and when it comes time to renew. Every insurance company is different, and they may use a different rationale for whether to keep policyholders on or not. The main ways to make sure you’re kept on are by responsibly paying your premium on time and not filing too many claims.
Filing several claims proves that you’re high-risk, not to mention the fact that each time you file a claim, your deductible increases. Therefore, only file a claim if it’s really necessary. You’re typically better off handling small repairs you can finance yourself without filing a claim with the insurance company. If the repairs would cost around the same or just more than your deductible, this is a sure indicator that you’re better off leaving the insurance company out of it.
If you’d like to get an idea of whether you would qualify for a homeowners insurance policy and how much you can expect to pay in premiums, request a free quote from David Pope Insurance. This tool is not only for first-time buyers. If you have a current policy, include it with your form, and we will give you an idea of whether you may want to switch to a new policy. We will deliver a quote to you the same business day until 7 p.m.
For homeowners insurance in Missouri, consider making David Pope Insurance your insurer. We have over two decades of experience and a wealth of expertise that mean you can trust us to help you find the best insurance policies to fit your needs. In addition to home insurance, we offer auto, commercial and life insurance, as well.
We have offices in St. Clair, Union, and Washington, and we serve throughout the states of Missouri, Kansas, Iowa, and Arkansas. Being a part of the communities we serve helps us to have close relationships with our clients and to understand how your home’s location plays into your homeowners insurance eligibility and premiums. You can also count on David Pope Insurance to be understanding, personable and honest.
If you have any homeowners insurance questions or would like to learn more about our products and services, contact us today. You can get in touch with us online or by phone at 636-583-0800. We would be happy to help you on your journey to protecting your home.