Like most homeowners, you probably realize that not all claims are covered by your home insurance policy regardless of where you live- Virginia, Washington, West Virginia, Wisconsin, Wyoming. Inevitably, a loss will occur and all or a portion of it may be excluded by the policy. However, did you know that there are things you can do that will cause your policy to be completely ineffective? These are not exclusions, but rather violations of the terms and conditions of your policy. Some may seem obvious, such as fraud, but others may be a bit more obscure. Here are a few of the common conditions that, if you violate them, will cause your policy to not cover a loss, or worse, be cancelled.
Concealment or Fraud –
As mentioned above, concealment or fraud is a very obvious way in which to lose coverage on your home insurance policy. According to the policy, this means something other than just “inflating” a claim as some people seem to think is acceptable. If it’s determined that you withheld information from the insurance company during the process of securing coverage, they can cancel your policy and not pay your claim. This means your application submitted for coverage must be completely accurate. Certainly any information you provide after a loss must also be completely factual. Not only will you lose your coverage, insurance fraud is a criminal offense and is punishable by law.
Non-Payment of Premium –
This may seem obvious, but many homeowners fall behind on their insurance premium payments. The insurance company has very defined terms in which they may cancel your policy due to non-payment of premium. This is usually regulated by the state’s department of insurance and requires certain notices and cure periods before the policy may be cancelled.
Substantial Change in Risk –
If the scope of what the insurance company is covering has changed substantially after the policy is in effect, the insurer may cancel your policy with a brief notice period. For example, if you added a perceived dangerous dog to your household, the insurance company may cancel you as they did not have an opportunity to underwrite that risk at the outset. Another example would be substantial renovations on your home such that the value changed and is no longer with the underwriting guidelines of the insurer. Insurance companies sometimes focus on a certain market segment, and if your house is no longer within their market segment, they may not want to insure you.
You may not assign your policy to anyone else without the insurer’s consent. For example, you might have sold or deeded your home to a family member and just assumed the insurance policy would stay in place. The insurer specifically forbids this unless they first provide permission.
Subrogation is when your insurance company has the right to pursue another party for reimbursement of a claim it has paid to you or on your behalf. If your neighbor’s tree fell on your house and caused substantial damage, your insurance company will pay you for the repairs and then pursue subrogation against your neighbor. However, if you somehow caused the insurer to not be able to pursue subrogation (perhaps through a separate agreement with your neighbor), they may cancel your policy. Your insurance company relies on the ability to recover its amounts paid in these situations, and you must not do anything to violate their rights.