4 Reasons Your Homeowners Insurance Might Get Canceled -- and How to Avoid It

I've been a homeowner in the past, and as a current renter, there's plenty I don't miss about homeownership -- including paying for homeowners insurance. 

However, having a policy is important for protecting what's likely your most valuable asset, and losing coverage could put your home at risk. 

Here are a few common reasons why homeowners insurance policies get canceled -- or not renewed -- and what you can do to avoid them.

1. You live in an area with an elevated risk of natural disasters

I knew someone whose home, which was right on a river, completely flooded during a storm. The insurance company paid for everything -- repairs to the damaged home and replacement furniture -- but didn't renew their policy afterward.

In 2023, insurance companies paid out a staggering $16 billion in underwriting costs, partially due to natural disasters like hurricanes, wildfires, and floods. As a result, many insurance companies have stopped issuing new policies in certain areas of the country, like California and Florida. Where companies remain, they've increased premiums to offset the risks. 

How to avoid it: This one is tricky because most people don't just pack up and leave their homes. If your policy isn't getting renewed, the best thing to do is to contact another provider to see if it will cover you.    

What's more, some government plans exist to help people who need insurance where homes are at risk. For example, the National Flood Insurance Program (NFIP) is managed by FEMA and can help homeowners get flood insurance.

2. You haven't paid your premium

Homeowners insurance costs have spiked 20% over the past two years, making monthly premiums unaffordable for many Americans. The recent price increases mean that the average policy now costs homeowners $2,377 annually. 

Unfortunately, these high costs can cause people to fall behind on their payments. If too many of your insurance payments are late or you fail to pay your premium, your insurance company will likely drop your coverage. 

How to avoid it: One of the best ways to prevent late or missed payments is to set up automatic payments with your insurance provider through your bank account. Many insurance companies will let you pay monthly, quarterly, or annually, and some will even give you a discount for signing up for autopay. 

3. You own a restricted dog breed

That's right; some insurance companies may drop your coverage or not pay liability claims if your dog is on the company's banned breed list. Some common dog breeds that are banned may include Doberman pinscher, pit bull, Rottweiler, German shepherd, and Chow Chow. 

Why ban some breeds? Some are known to be more aggressive than others, and dog bite claims are very expensive, with the average costing $58,545.

How to avoid it: The easy answer is to not own a dog breed that insurance companies won't cover. But if you already own your dog, it may be best to do some comparison shopping to find a policy that will cover your pet's breed. 

It's also worth mentioning that some states have laws limiting breed restrictions or no restrictions altogether, including Pennsylvania, New York, Connecticut, Michigan, and Nevada. 

4. You file too many claims 

Years ago, a huge summer storm swept into my neighborhood and dumped golf ball-sized hail on top of my house and car. I was a relatively new homeowner at the time, and I didn't know I could file a claim until a friend told me. 

Thankfully, I was able to get money for the cost of the repairs without any negative impacts on my insurance. But if I had made that claim, along with many other claims, over a short time, it's possible my insurance company wouldn't have renewed my policy. 

How to avoid it: While it's a good idea to file a claim if your home has received major damage -- after all, that's what insurance is for -- it's a good idea to not file too many claims. There's no preset amount, but many experts recommend not filing more than two claims in a five-year period. 

The good news is that some of the reasons why your homeowners coverage can be canceled are entirely in your control. One way to ensure your provider offers the coverage you want is to do some comparison shopping. If you think your current provider is charging too much or doesn't offer adequate coverage, you may be able to find a better deal elsewhere.