When homeowners pay for services, they tend to make some assumptions about what they are actually getting. While insurance companies typically keep your best interest in mind, certain strategies have evolved over time to protect them as well. The reason this exists is because insurance fraud raises the cost for all customers, even the law-abiding ones. It is in everyone’s best interest that certain policies be canceled, but it also can happen in error. To help guide both the curious and those impacted by these rules, Capital is providing the summary below of some reasons your home insurance company could cancel your coverage.
When a customer makes more claims than what is expected, an insurance company may scrutinize the policy much more closely. This process may reveal inconsistencies that could compromise a homeowner’s coverage. Additionally, investigators may be used to determine the accuracy of any claims made. Reporting false information constitutes fraud and can void your policy, as well as bring about criminal charges.
Insurance companies thrive thanks to the understanding of risk and what makes up a “safe bet.” Using scientific studies and in-house experts alike, your insurer cannot predict the future– but they do balance the worth of your premiums against the likelihood of you making a major claim. On rare occasion, your home’s risk assessment may change drastically in a short period of time. When this happens, one option for the insurance company is to cancel your coverage. This is most common when a home is abandoned, unmaintained, or falls into disrepair.
Crime Does Not Pay
Being convicted of criminal charges changes your life in many ways and the insurance industry is no exception. A new or unreported criminal record can void or cancel your coverage, depending on the level of the offense. Also, adjusters and investigators can decide that you are deliberately taking risks with intent to pass responsibility on to your insurer. This is sometimes known as “moral hazard” and can result in cancellation.
If you routinely miss insurance premium payments or have not paid at all in several months, an insurance company is justified to cancel your insurance. This is probably the most common reason why policies are voided, but they are not always intentional. Financial fraud, system glitches and even human error can all accidentally void your policy without your knowledge. Always review your bank records and regularly confirm your insurer is on good terms.
Questions? Concerns? Contact or visit Capital Insurance Brokers for the answers today!