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Ask the Home Insurance Expert

I got a cancellation notice from my home insurance company due to unpaid bills. Can I reinstate my policy after the cancellation date if I pay?

You'll need to reapply for home insurance, and you might have to pay higher premiums and perhaps face new conditions attached to the insurance policy. Even if you get your home insurance through the same company, the insurer might want to inspect your house to make sure there have been no intervening losses since the policy was cancelled.

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Beware that a nonpayment history can lead to higher premiums even if you go with a different insurance company. That's because cancellation of a policy by an insurer pegs you as a higher risk customer.

Be honest when the application asks if you've ever been cancelled. Lying on an insurance application to save money is considered misrepresentation and can lead to yet another cancellation if the insurance company finds out. Paying higher premiums is less expensive than the devastation you'd face if your house burned down and you had no insurance.

Once you have a new policy in place, consider arranging a payment schedule that works better for you, such as paying monthly. If you're short on cash when the bill is due, consider paying with a credit card.

Meanwhile, the cancellation of your insurance policy for non-payment sounds like a symptom of a larger financial problem. Seek help from a financial counselor if you're having trouble meeting your basic expenses. Get referrals to reputable non-profit credit counselors through the National Foundation for Credit Counseling. Look for a service that offers free education and can help you set up a budgeting and savings plan, as well as work with creditors if you're drowning in debt.

For more, see insurance grace periods: When do you get cut off?

Last updated: Nov. 26, 2010
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