Home Insurance Forum

Jun. 28, 2007

I just received cancellation of a homeowners insurance policy I had for only 30 days. I have 30 days to get new insurance. The reason was "increase in hazard or material change" in the risk assumed by the company when the policy was written. This was after the inspection. Will I have a problem getting insured now?

Teresa, Pennsylvania

Dear Teresa,

You can try to renegotiate with your insurer, Liberty Mutual. It may be able to sell you another policy, although it could be more expensive because of your increased risk.

Bill Wilson, director of the Independent Insurance Agents of America's "virtual university," says insurers have 60 days from policy inception to cancel coverage. That gives them the opportunity to more completely evaluate the property's risk in order to determine if it meets their insurability requirements and if the premium you had been quoted originally is proper for the risk insured.

Unless the policy form or state of Pennsylvania requires insurers to give a reason for cancellation, Wilson says the standard homeowners policy allows them to cancel for any reason. It is only for mid-term policies (those in effect for more than 60 days) or renewed policies that insurers usually must provide a reason, though the law in some states requires them to give a reason if asked by the insured.

Although you did not indicate a specific "increase in hazard," Wilson says he gathers that your insurer's decision resulted from the on-site survey. It could be the insurer discovered there was a swimming pool, trampoline, dog, or other hazard that increased your liability risk. Or, the survey could have indicated inadequate fire protection (e.g., no fire hydrant nearby), poor maintenance or roof surface, or other conditions that increase the risk of property damage.

Whether you will have trouble getting insurance will depend upon the nature of the "hazard(s)" that troubled this insurer. In some instances, it can be difficult for a person to find coverage when he or she has a poor loss history, credit problems, and so forth. In this case, the critical issue for you is to identify what made you "uninsurable" in the eyes of this company, then try to correct it so it will not be an issue for another insurer.

If you encounter any difficulty in getting specifics from Liberty Mutual, or in acquiring another policy, you could consult the Pennsylvania Insurance Department for assistance.

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Disclaimer: We are journalists, not financial planners or insurance brokers. Nothing we say should be interpreted as a recommendation to buy or sell any insurance product, or to provide other financial or legal advice.