When you own property, you have a lot of responsibilities, including buying homeowners insurance to protect your investment. Unfortunately, in many cases, the insurance company may deny your application or charge high premiums. If you would like to learn more about homeowners insurance and why you may be denied, keep reading.
1. Your Credit History
Your credit history affects many aspects of your life, and homeowners insurance is no different. However, insurance carriers don’t usually use your FICO credit score. Instead, they determine a credit-based insurance score (CBI). They determine this number by considering previously missed payments (especially mortgage and insurance payments), overdraft accounts, and current debt.
If your CBI score is particularly bad, you may be totally rejected for homeowners insurance, but in most cases, it simply affects your premiums. If you have struggled to get standard homeowners insurance because of your CBI score, you may want to consider a non-standard policy.
2. Location of the Property
In some cases, the location of the property requires the insurance carrier to take a higher risk if they provide you with insurance. For this reason, they may fully deny coverage or require a high premium. In some cases, locations have more natural disasters, such as flooding or earthquakes. If this is the case, you may actually have to buy a second policy.
In other cases, the area may have a lot of crime. If there is a lot of crime in the area, there is a higher risk that someone may break into or vandalize your home, which makes you a higher risk for the insurance carrier.
3. Condition and Age of the Property
Another factor insurance carriers consider is the condition of the home. If the home has been damaged by major disasters, or it has frequently had claims made against it, the insurance carrier will assume it is a higher risk. For example, underlying damage from an earthquake may affect the entire structure of the home, which could lead to major damage in the future, and the insurance carrier may not want to take the risk.
In some cases, the insurance carrier will require you to make repairs to the home before they agree to insure you. Older homes can also pose a problem, even if they are in good condition. Older homes may have older, hazardous wiring or old pipes that may burst. In some cases, property owners have to get specialty insurance for their older homes.
4. Type of Property
Finally, even if you own a property that is in good condition and a great location, it may be hard to find insurance if the house is hardly used. For example, if you have a vacation home in the mountains that you visit a few times a year (but is vacant the rest of the year), it may be hard to find affordable insurance because the house is viewed as a higher risk. Empty homes are perfect targets for criminals.
Similarly, if you have a vacant home that you are trying to sell or rent to someone, getting insurance can be complicated while the home is vacant. This may be even more difficult if the home is in a potentially dangerous location or has been poorly maintained.
Many factors can affect whether or not you are approved for homeowners insurance. Even the location of the home may force insurance carriers to deny standard insurance. Luckily, many insurance carriers also offer non-standard insurance, which may be a better choice, depending on your situation.
If you would like to learn more, or if you need to get a quote on standard or non-standard homeowners insurance, contact us at Metropolitan Insurance Service Consultants, Inc., today.