How to Get Homeowner’s Insurance After Being Dropped

If you’re a homeowner with a mortgage, homeowner’s insurance probably isn’t optional. Your mortgage company will want to know the money they’ve lent you is covered in case of a catastrophic loss.

But even if your home is paid off and no one’s looking over your shoulder anymore, insurance is a must. Without it, you’re risking the loss of what’s likely to be a substantial part of your net worth, should you be faced with an unfortunate scenario like a fire or tornado.

Homeowner insurers have paid out record claims in recent years –  the number of billion-dollar disasters in the U.S. in 2024 (27) was second only to the number in 2023 (28).

With that increased risk, the unthinkable is happening to Americans more frequently – their insurer cancels their homeowner's insurance policy (or declines to renew it), citing increased risk. Or the insurer raises premium costs so high, they’re no longer affordable. In a survey by ValuePenguin, 1 in 4 respondents said their insurer had declined to renew their policies.

This issue hit the headlines recently, when financial advice celebrity Suze Orman reported that premiums for her Florida condo had skyrocketed to $28,000 per year. Orman, who can afford to replace her condo without any help, decided to just go without coverage. But that’s not an option (at least not a good one) for most people.

So, what happens if you lose homeowner’s insurance?

REASONS FOR BEING DROPPED BY HOMEOWNERS INSURANCE

DISASTER RISK

A higher potential for natural disasters is not the only reason someone might be dropped by their insurer, but it’s a big one, especially in disaster-prone areas like California (fires) and Louisiana and Florida (hurricanes). Insurers there have been faced with paying out billions in claims for tens of thousands of customers at once.

Insurers are regulated at the state level, and some states won’t allow insurers to raise premiums beyond a certain limit. So, when they must make massive payouts, some insurers have gone bankrupt or decided they can no longer afford to offer policies in that state or to people who live in the riskiest areas – and those customers are dropped.

On the other hand, some insurance companies have been able to increase premiums to account for the higher risk, which can have the same ultimate effect. If you can’t afford the premiums, you have no choice but to cancel coverage.

TOO MANY CLAIMS

It’s also possible to be dropped if your insurer feels your individual risk is too high. This can happen if you file a lot of claims against your policy. Even if they don’t drop you, they may raise premiums to an unaffordable level. It’s a good idea to avoid small claims and consider raising your deductible accordingly. For example, if you are comfortable paying up to $5,000 in damages out-of-pocket, then make your deductible something close to this amount. This can also help lower your premium.

LACK OF CARE AND MAINTENANCE

Recently, insurers have begun using new tools to find homeowners who appear to have increased risk: satellite and drone imagery. For example, if an insurer thinks they see missing shingles or algae on your roof, or unreported injury hazards in your backyard, they can cancel or decline to renew your policy.

IMMEDIATE STEPS TO TAKE IF YOUR POLICY IS CANCELLED

Your insurer is required to give you advanced notice before your policy is cancelled or “non-renewed,” and you’ll want to move quickly.

If the reason for dropping your coverage is your own individual risk, and you feel the insurer is acting on incorrect information, you may be able to appeal.

If you can’t salvage your current policy, it’s time to start shopping around for coverage with another carrier.

Note that if you have a mortgage and your coverage ends, your lender can buy insurance and charge you for it. It’s called “force-placed” insurance, it’s generally much more expensive than a traditional policy and it usually only will protect the lender, not you.

FINDING NEW HOME INSURANCE COVERAGE

If you need to secure new coverage, a private insurer is usually your best option if you can qualify and afford the coverage. Contact other insurers for quotes and consider asking your neighbors for recommendations.

If you hit a dead end trying to find private insurance coverage, contact your state insurance department. They may be able to tell you which insurers provide coverage in your area.

If you’ve confirmed that private coverage is unavailable or unaffordable, most states have an “insurer of last resort” plan that is legally required to cover the highest-risk individuals, known as residual plans. Many are Fair Access to Insurance Requirements Plans, which are insurance pools that cover people who can’t otherwise get property insurance. As of August 2024, 32 states have them.

Other states may have their own state-owned insurance residual plans to cover residents who have trouble getting private coverage, and they have their own requirements.

In some states, residual plans have gone far beyond a last resort. Florida has had so many insurers go bankrupt or leave the state that their residual plan provider, Citizens Property Insurance Corp., became the largest insurer in the state.

Note that residual plans may be more expensive and offer less coverage than traditional plans and require you to make improvements to your home that can lessen your risk. Your state insurance department can give you information about your state’s residual plan and its requirements.

LEGAL PROTECTIONS AND CONSUMER RIGHTS

Because insurance is regulated by states, your legal protections and rights vary depending on where you live. The best resource is your state’s insurance department, and you can ask them:

• What information is the insurance company required to give me regarding the cancellation, nonrenewal or policy increase?
• How much notice must they give me when canceling my policy or declining to renew it?
• Can companies use satellite or drone photos of my home in their risk assessments? If so, must they disclose their usage and are they required to send someone to do an in-person assessment if I dispute the accuracy of the image?
• What are the allowable reasons and burden of proof an insurer must reach before canceling my policy?
• Do I have the right to appeal if my homeowner’s insurance dropped me?

Once you have this information, you may decide to dispute the cancellation with your insurer or find out if there are steps you can take to lessen your risk and restore your policy (for example, replacing your roof or removing hazards from your yard). If you feel the insurer has violated state regulations, you can file a report with your state insurance department.

THE SPYING GAME? AERIAL DRONE AND SATELLITE IMAGERY

If you’ve ever worried that insurers are spying on your home, you could be right. Insurers have increasingly begun using aerial photography to assess properties and help make decisions about which homes they’ll write or continue policies on. Vexcel, a partner of the Geospatial Insurance Consortium, has high-resolution images that cover over 99% of the U.S. population.

In addition to images collected by satellites and fixed-wing aircraft, insurers have also started to use drones to capture images. The use of drones raises privacy concerns and local or state laws may make it illegal for your insurer to fly a drone in the airspace above your property. Some states have specific regulations or guidance on the use of drones by insurers – contact your state insurance department for information.

Can a home insurer drop you due to aerial photos? Potentially, yes. Some states require or strongly suggest that insurers follow up any concerns raised by aerial images with an in-person visit by an adjuster. But the media has also highlighted cases where a homeowner reported being dropped solely on the basis of images, even when they gathered evidence disputing them.

As of early 2025, the National Council of Insurance Legislators is working on model legislation that states could enact to govern the use of drones in property insurance and clearly spell out your rights. Again, your best course of action is to contact your state insurance department to understand the law and requirements where you live.

PREVENTING FUTURE CANCELLATIONS

To have the best chance of avoiding a coverage cancellation or nonrenewal, you can do simple things like ensuring your policy payments are on time, giving accurate information to your insurer and keeping your home well-maintained.

With the increasing use of aerial imagery, you should also be aware that your insurer could view your property from above at any time. Making sure any roof issues are handled quickly, keeping your property tidy and keeping trees near your house trimmed are probably good ideas as well.

You have less control over climate and disaster-related cancelations, of course. Knowing your risk and your options can help you plan for that possibility.

INSURANCE IS CRITICAL, SO ACT QUICKLY

If you lose your homeowner’s insurance, it’s important to take action to avoid a gap in coverage and potential force-placed insurance. You may want to first ask your insurer for more information and see if there are changes you can make to retain your insurance.

If you need to shop for insurance, start with private insurers, and consider a FAIR or other residual plan if you’ve exhausted other options. If you need help, contact your state insurance department.

Insurance is a critical part of financial planning, and we highly recommend not taking the risk of going without homeowner’s insurance unless you can afford to replace your home without help. An Edelman Financial Engines financial advisor can help identify your high-level needs for insurance.