Chapter 8 What Can Make You Ineligible for Homeowner’s Insurance?

Although the amount of coverage is the same, different homeowners will pay different costs for home insurance. When an insurance provider calculates a person’s rates, they look at numerous factors that may increase or decrease the risk of loss. However, some people are ineligible for homeowner’s insurance because they, or their home, don’t meet minimum standards set by the insurance company. Read on to find out how you may be ineligible for home insurance.

Insurance Score

An insurance score is a numerical ranking based on a person’s credit history, according to the Insurance Information Institute (III). It’s used by insurance companies to predict how likely someone is to file a claim. The III states that studies show a person who manages his or her finances well is less likely to file a claim. Using a person’s credit history to determine their insurance score, as well as their payments, enables insurers to determine a the cost of a homeowner’s insurance more accurately. Therefore, the better a person’s insurance score, the less they will pay for insurance.

If a person’s insurance score is too low, they may be denied coverage because of the perceived risk of insuring their home. To get an idea of what your credit history is, visit the Federal Trade Commission’s website here.

Past Claims/Losses

A homeowner’s claims history may make them ineligible for coverage. If the homeowner has submitted what is considered to be an excessive amount of claims, then an insurance company may be less likely to provide coverage because they’ll view the home as a high risk. Homeowners may even have trouble finding insurance for a home they recently purchased if the previous owners filed a lot of claims or if the property has a history of having problems, according to the Digital Federal Credit Union’s StreetWise Insurance Guide.

Hazards

Internal and external hazards can make you ineligible for homeowner’s insurance. External hazards include tree limbs, trash, roof in need of repair, broken windows, junk, excessive number of cars, do-it-yourself jobs such as an addition to the home that wasn’t properly built or inspected, damage to chimneys and failure to have them cleaned, cracks in the foundation, and more.

Meanwhile, a woodstove (regardless of whether or not it was installed by a professional), hoarding, and excessive personal property or something that makes it a greater fire risk count as internal hazards. If a person has excessive internal and external hazards, they may be denied insurance coverage because their home will be considered too much of a gamble to insure.

Existing Damage

When a homeowner purchases a new house or a new policy, an insurance company will send an inspector out to a home before or after the policy is issued. If the inspector spots any damage, then it is reported to the insurance company and that information is used to calculate the homeowner’s payments. Homes that have extensive damage or other hazards, such as a tarp covering a section of the roof, may not be insured by an insurance company unless satisfactory repairs are done. If repairs aren’t completed within a satisfactory time, then the policy may be canceled.

Modular Homes or Trailers

Some modular or trailer homes may be ineligible for insurance coverage for a variety of reasons. A modular home is one built in sections in a factory and then transported to a certain location and erected on a foundation. An insurance company may consider a modular home the same as a standard home because it is built with a wooden frame and it sits on a foundation. Meanwhile, a trailer home is on that is pre-built and usually sits on wheels, although modular homes may as well.

Home insurance companies decide whether a modular or trailer home is insurable by its condition and age. Each insurance company has their own age limit, but the most common is 20 years. Other insurers may say that the age of a home may not exceed three to eight years, otherwise it is ineligible for coverage.

Animals

The kind of animal you have may cause you to be ineligible for home insurance coverage. Most home insurance companies insure homeowners with dogs, but the cost of insurance may go up depending on the breed of the dog. Dog bites are typically covered by liability insurance, which is usually offered with home insurance. But dogs that are considered to be of a “vicious breed,” such as a Pitt Bull or a Doberman Pinscher, will be more expensive to insure because they’re considered more likely to bite people. In some cases, insurance companies won’t offer any type of insurance, especially if the dog has bitten someone in the past, according to the III.

For homeowners who own exotic pets, such as big game cats, certain reptiles, or primates, they may find that many insurance companies won’t offer coverage for their companion. In fact, insurers may still offer home insurance, but the exotic animal will be excluded from the coverage, according to Bloomberg. However, a homeowner can purchase an exotic-pet insurance policy separately.

Location

Location plays a big role in determining a person’s eligibility for home insurance as well. Insurance companies may exclude certain types of coverage based on the location of the home. For example, home insurance companies in Texas may not offer windstorm, hurricane, and hail coverage for homes in the state’s 14 coastal counties.

In addition, homes in rural areas may be excluded from coverage if they live more than five miles from a fire station or a fire hydrant. The further away fire protection is, the greater the risk to insure the home because of the chance for more property loss because of a fire or lightning strikes, according to the Rocky Mountain Insurance Information Association (RMIIA). If your home is located in a frequently flooded area, then you may also have difficulty insuring it.


Get Homeowners
Insurance Quotes

It's free and only takes minutes!