Purchasing home insurance for your property is an essential aspect of being a homeowner. Not only does it protect your investment from unforeseen perils, but it can also give you peace of mind knowing you won't need to pay out of pocket for certain damages and losses that occur on your property.
If it's your first time buying home insurance, you may be wondering whether an insurance carrier can deny you coverage. To learn more, read through our guide below!
Is it possible for my insurance company to refuse coverage?
As a new homeowner, getting high-quality home insurance is recommended. However, certain scenarios could cause you to be denied coverage. Here's a closer look at why a potential policyholder may be barred from purchasing a homeowners insurance policy for their property:
You've been previously convicted of insurance fraud
Unfortunately, if you've been convicted of criminal offences like insurance fraud, where you've provided false information or inaccurate information to your previous insurers, not only would you invalidate your home insurance, but you could also be denied insurance by a future home insurance provider.
When filing a property claim, it's essential that you be completely honest about the circumstances surrounding your claim. Insurance adjusters conduct thorough investigations before approving compensation for losses. Any attempt at lying could lead to several consequences and prevent you from ever purchasing a homeowners insurance policy again.
Your claims history
If you have numerous claims related to your property for damages and losses of your home inventory, you could be denied from purchasing new property insurance from your current insurance company upon your renewal date. This is because each home insurance claim you file will cost insurance companies money. And, the more money your insurance company pays, the more of a risk you'll be to insure.
In cases like these, many insurers will refuse to renew your property insurance policy in the future. When this occurs, you'll need to find another insurance company that is willing to cover you. Just keep in mind that numerous insurance claims often raise red flags to other insurers, who may also deny coverage.
Poor insurance score
An insurance score is calculated based on your payment history, claim history, and other factors associated with how you are as a customer. Having lower insurance scores tends to make insurance companies think twice about insuring you. While you may find an insurer willing to protect you, you may face a higher premium for less than adequate coverage that doesn't have your best interests in mind.
Your home has numerous hazardous features
Your home's location plays an important role in your premium rates. But did you know that where you live, and certain features in your home could lead to you being denied a homeowners insurance policy? Hazardous home features include:
- Being too far away from a fire station.
- Having an oil or wood-burning stove.
- A wood roof or other fire hazard.
- Living in a high-risk location with high crime rates.
- And more.
If you're a property owner looking for homeowners insurance, we recommend shopping around and speaking with different insurance providers to determine whether or not you'll be eligible for coverage.
You live in a prior foreclosure home
Purchasing a previous foreclosure home can help you save a significant amount of money. But it doesn't come without risks. Most home insurance carriers are reluctant to issue home insurance on a foreclosed property. The primary reason for this is that many foreclosure properties are in poor condition and, therefore, more susceptible to having claims filed. As a result, the company will specifically craft an underwriting guideline that excludes foreclosures from being covered.
Therefore, when in the market for a new home, make sure you speak with your real estate agent to confirm whether the properties you're looking at have any prior foreclosure statuses.
Tip: find a high-risk insurance carrier
While it may be difficult for you to acquire insurance given the above-noted factors, you may have luck with a high-risk insurance carrier. These companies specifically offer insurance to customers who've been died by other insurers. Note that while it is possible to purchase insurance requirements from these insurers, it's important to mention that you'll likely face higher than average premiums.
If you are struggling to find an insurer that is willing to offer property insurance to you, you may want to consider working with an insurance broker. Brokers work independently from insurance companies, allowing them to shop around with different providers so you can find a fair plan for your insurance needs. Beyond this, they're also able to offer unbiased advice, explain any misunderstanding you may have about property insurance, and help you qualify for discounts, which could bring down your insurance premiums.
Can my provider deny my homeowners insurance claim and how to prevent it
If you do manage to get homeowners insurance from an insurance company and there comes a time when you need to file an insurance claim, it's essential to note that it's still possible that you could experience a claim denial from your provider. So, what types of circumstances could lead to a claim denial? Here's a closer look:
Lying about potential hazards
Lying about your address or risks relative to your home could lead to a denied home insurance claim. It's essential that you provide your insurance company with accurate information about your property so they can find coverage that fits your specific needs. Otherwise, you could be forced to pay for losses on your own.
Starting a home-based business
Starting a home-based businesses business in your home and filing a home insurance claim could lead to a denial, given that any business operations that lead to damages or losses should be filed under business insurance. If you do not have this type of coverage, your home insurance claim will be denied, and you will need to pay for any damages or losses out of your own pocket.
Lying about your personal belongings
When getting home insurance, you must offer a reasonable estimate of your home's belongings. Providing an accurate appraisal is crucial; if your insurance provider believes you allocated a deceptive or exaggerated value to your items, they may decline your claim or cancel your coverage.
Conducting criminal activities in your home
Conducting criminal activities in your home or causing intentional damages with the hope of getting an insurance payout will lead to an automatic claim denial. In certain scenarios, you can also be charged with a criminal offence under the Criminal Code of Canada, which will result in other consequences.
Renting out a part of your home
If you rent out a part of your home and someone is either injured or part of your home is damaged by your tenants, your claim could be denied. This is because any type of losses or injuries that result from tenants would need to be covered under a tenant's insurance policy. Again, without the right type of coverage, you could be left paying for legal fees, medical bills, and repairs all on your own.
Non-payment
If you are behind on your insurance payments, your insurer may use your missing payments as a reason to deny your claim. Paying your coverage on time shows your insurer that you value your coverage, which will help you remain in good standing. Otherwise, you could be left unprotected when the unexpected happens. It can also lead to more difficulties finding coverage in the future.
Claiming perils specifically excluded from your plan
When it comes to perils like water damage and mould, whether or not they are covered by your insurers depends on the circumstances that lead to this type of damage. For example, if the water damage and mould occurred as the result of a covered peril that's listed in your insurance policy or you've purchased add-on coverage that specifically includes water damage, such as flood insurance or sewer backup coverage.
In contrast, if the water damage and resulting mould occurred as a result of homeowner neglect or wear and tear, your claim would be denied. So, make sure to read your policy to determine whether you have coverage before filing a claim under a peril that is specifically excluded from your policy. How can you avoid claim denials? Here are some tips to help you:
Tips to prevent claim denials
To prevent home insurance claims from being denied by your insurers, here's what you need to do:
- Document damage with high-quality photos and videos as soon as possible. The more evidence you have, the better.
- Contact your insurer right away. Waiting too long can make the claim process could put you at risk of filing after your deadline.
- Never conduct repairs on your home before contacting your insurance and opening a claim. An adjuster will likely require their own estimate of damages before compensation is received.
What can I do If my home insurance claim is denied by my provider?
So, your homeowners insurance claim was denied; what are you supposed to do now? Here are some options that you can consider:
1. Take a look at your policy
First, take a look at your insurance policy and get a better understanding of why your insurance company denied your claim. There's a chance you may have misunderstood your policy or filed your claim wrong.
2. Submit further evidence
If possible, you may want to consider filing additional evidence that could be missing. Insufficient documentation of the events could make it difficult for your claims adjuster to approve your claim when important information is missing.
3. Get a second opinion
If you've filed further evidence and concluded that your peril is listed in your insurance coverage, you can always file an appeal. During this time, a third party will review your claim and determine whether a new decision can be made based on the circumstances at hand.
4. Speak with a lawyer
Lastly, if all else fails, you may want to consider speaking with an insurance lawyer. They will be able to provide you with legal advice on your situation and help you navigate the situation from then on.
Standard home insurance coverage
When it comes to standard homeowners insurance, you'll typically find the following policies:
Personal liability
Personal liability coverage protects you in the event a third party files a lawsuit against you for bodily injuries or property damage that occurred at your home. In the event a claim is filed, liability coverage will cover the cost of medical bills, repairs, replacements, legal fees, and other costs associated with settling the claim.
Contents coverage
Contents coverage, also known as personal belongings insurance, protects the contents within your home from certain perils that lead to damages or losses. If an insured peril occurs in your home, you'll be able to file a claim with your insurance company and be compensated for your losses up to your coverage limits.
Property damage insurance
Property damage insurance protects the physical structure of your home from certain damages. Common perils included in a standard home insurance policy include fires, vandalism, theft, weather damage, and other perils listed in your specific policy.
Optional insurance policies
If you want to supplement your basic home insurance plan with further coverage, here are some optional coverages you may want to consider:
Sewer backup coverage
Sewer backup in your home can pose serious health risks and damage. If you reside in an area with older municipal infrastructure or do not have a backwater valve or sump pump installed, sewage backup coverage is a great way to have peace of mind if something unexpected happens.
Overland flooding insurance
While you can't prevent flooding from natural sources of water, you can protect your home and your bank account with overland flood insurance. Typically, water damage is not covered under standard homeowners insurance. As such, if you live in an area that's close to natural bodies of water, you may want to consider this separate policy to ensure you are fully protected.
How to improve your insurability as a homeowner
If you have a higher risk profile, know that there are ways you can improve your insurability as a homeowner. Here's what you can consider if you want to bring your average home insurance costs down:
- Bundle your policies: Even as a high-risk customer, you can still save money with your insurer by bundling your home and auto insurance policies. Most insurers offer discounts to customers who have more than one insurance plan with them.
- Update your home: If your home is deemed uninsurable by your insurer, consider investing in updates to your home's plumbing, electrical, heating, cooling, and security systems to lower your risk profile.
- Prevent future property insurance claims: While several factors are used by your insurer to determine your risk levels, your own claims history plays a major role in costs. To prevent future insurance claims, actively maintain your property throughout the year. Overtime, this can help bring your costs down, making your property insurance more affordable.
Looking for an affordable home insurance policy? Contact BrokerLink today
At BrokerLink, we help homeowners purchase high-quality home insurance at an affordable rate. We understand that every home and homeowner is unique, which is why our brokers take the time to understand your needs and budget before helping you customize an insurance plan that works for you. Beyond standard homeowners insurance, BrokerLink is also able to help you acquire the following:
If you're interested in working with one of our experienced brokers, feel free to visit us at one of our many locations across Canada! Not in the neighbourhood? Don't hesitate to give us a call over the phone to speak with a team member at any time.
Alternatively, if you're browsing for coverage options, take advantage of our free online quote tool to get a competitive and customized insurance quote within minutes.
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