With extreme weather events increasing in recent years, homeowners insurance companies have raised premiums or stopped offering coverage completely. Many of the policyholders hit with nonrenewal or cancellation notices are the ones most in need of insurance coverage.
Just six months before the devastating wildfires ripped through Southern California, State Farm canceled 1,600 policies in the Pacific Palisades community of Los Angeles.
If you live somewhere with a high risk of certain disasters, you might not be covered for very costly scenarios. That includes Californians in wildfire-prone areas, Floridians in hurricane paths and Texans in areas with a high probability of wind and hail damage.
As the nationwide insurance crisis gains more public attention, some temporary measures have been taken. For example, the California Department of Insurance issued a one-year moratorium on nonrenewals and cancellations for properties located near the recent wildfire destruction.
Here’s more on what you can do if you’ve been denied insurance on your home.
Read more: Fires, Floods, Hurricanes and Tornadoes: Do You Need More Home Insurance for Natural Disasters?
What homeowners insurance covers
Insurance won’t cover everything. Flood damage, for example, is not part of most standard homeowners insurance policies. Neither is damage from earthquakes, mudslides, mold or pest infestations. If you have failed to maintain the property in good condition, your company can determine it’s not responsible for certain damage.
Though policies vary, standard homeowners insurance typically covers these areas:
Dwelling protection: This portion protects the actual structure of the home. If a tree falls on the roof, for example, or a vandal breaks your glass door, you can submit a claim to have your insurance company help pay for the repairs after you meet your deductible.
Personal property protection: This portion helps cover costs related to the actual belongings in the home. If the vandal who broke the glass door comes in and steals your living room furniture, personal property protection could help you buy new furniture. It’s important to note that this may not cover everything in your home. For example, if your $2 million wedding ring is stolen, this may well exceed your limits, which is why a lot of homeowners opt for additional coverage for especially valuable items.
Liability protection: This portion applies to the potential costs of an injury on your property. If someone comes to your house, falls down the stairs and winds up in the hospital, you could be liable for the damages. This coverage can help pay for those medical bills and other related costs for the victim.
Read more: Insurance Premiums Spike as Natural Disasters Strike. What Homeowners Can Do
Why you might be denied homeowners insurance
While there are a variety of reasons you might get rejected for coverage, generally when insurance companies determine a high likelihood of risk, they’ll incur more costs, and you’ll have a tough time getting approved.
Here are a few of the most common reasons homeowners are denied or dropped from coverage.
A history of claims
The most common reason policyholders are dropped from coverage is that they have lost their provider’s money. Policygenius research shows that 36% of those who lost their insurance already filed a claim or multiple claims.
High risk of natural disasters
With climate-related disasters on the rise, an increasing number of property owners living in high-risk areas have faced a nonrenewal or outright cancellation of their homeowners insurance coverage.
In 2022, Allstate announced a pause on new condo and homeowners insurance policies in California. Over the last two years, State Farm made major reductions to new and existing California insurance coverage, and in 2024, Liberty Mutual ended fire-dwelling protection for around 17,000 California homeowners. In Texas, both Progressive and Foremost (a subsidiary of Farmers Insurance) stopped renewing homeowners policies.
Some companies are pressing pause on issuing new policies, while other companies are exiting the market altogether: Around 30 insurance companies left Florida after the devastation of Hurricane Ian in 2022.
Age or condition of the home
Insurance companies also evaluate a home’s age and condition. An old home lacking updated plumbing or electrical wiring, for instance, might not qualify for a standard policy. According to Policygenius, 33% of homeowners who have been dropped from their insurance coverage failed a home inspection and didn’t make the necessary improvements.
Companies might also be wary of features that could pose potential hazards, such as nonfenced-in swimming pools, wood-burning stoves or an open pit or well in the yard. It might also be tough to qualify if you’re living in an unconventional home, such as a tiny house or yurt.
Read more: 8 Steps for Homeowners When You’re Home Is Destroyed or Damaged by a Wildfire
What to do if you’re rejected for insurance coverage
If you’re rejected for homeowners insurance, here are some steps you can take.
Find out why
Ask the company to explain the reason behind the rejection. A company is legally required to share why they denied coverage to an applicant, according to Loretta Worters, vice president of media relations at the Insurance Information Institute.
Homeowners Insurance: What to Do If You’re Denied Coverage
