How to Get Insurance After an Insurer Denies You

What do homeowners do when they can’t obtain insurance from private companies?

Private insurers aren’t obligated to do business with homeowners. Sometimes, insurers decide doing business is too risky.

Today, we’re explaining how to get homeowners insurance even when a private company denies you.

Why Insurers Turn Away Policyholders

More insurers are turning down business than ever.

Insurers have a simple reason for turning down business: at some point, insuring someone becomes too risky.

Insurance is a for-profit business. Whether it’s a publicly-owned company or a mutual insurance company, insurers need to make more money than they spend.

Eventually, risk can rise to a point where it’s no longer profitable for an insurer to do business.

Homeowners in certain volcanically active regions of Hawaii, for example, have historically been unable to purchase insurance because the risk of a volcanic eruption is too great – and too unpredictable – for insurers to make a profit.

Today, homeowners in other parts of the country are facing a similar struggle. From hurricane risk in Florida to wildfire risk in California, the risk of insuring homeowners in certain areas is simply too great.

Reasons for Insurance Non-Renewal or Denial

If an insurer decides it’s too risky to insure you, then they may deny your business or fail to renew your policy.

Some of the specific reasons insurers deny new business or fail to renew your policy include:

• Excess Wildfire Risk: Homeowners insurance companies periodically review the risk of wildfires. If risk is too great in a certain area, then insurers could cancel policies. In 2024, State Farm canceled thousands of policies across Los Angeles for that reason – just months before the costliest wildfire in US history affected homes across the city. California’s insurance cancellations due to wildfires have become so bad, in fact, that the California Department of Insurance recently issued a mandatory one-year moratorium preventing homeowners insurance companies from canceling or not renewing policies in Southern California.
• Excess Flood Risk: Ocean levels are rising. As oceans rise, and as weather becomes more severe, homeowners are facing a higher risk of flood damage. Your home may not have been in a flood zone when you purchased it. However, flood zone maps are changing, and a growing number of homeowners now have a greater risk. Most mainstream insurers don’t provide flood insurance because of the risk; instead, homeowners use FEMA’s National Flood Insurance Program (NFIP) to buy coverage in low-lying coastal areas.
• Excess Hurricane Risk: Hurricanes and windstorms are becoming more severe. In wind-prone parts of the country, like the southeastern part of the United States, some homeowners must buy a separate windstorm insurance policy in addition to ordinary homeowners insurance (ordinary policies exclude wind damage in these areas). Some homeowners in Florida have seen rates double since 2021, for example, with some paying as much as $12,000 per year for homeowners insurance because of hurricane risk.
• Too Many Claims: If you make two or more homeowners insurance claims in a short period (say, one to three years), then your insurer could deny your claim. Many insurers raise rates significantly after the first claim. After the second or third claim, however, the insurer could decide you’re too risky to insure and cancel your policy altogether.
• Non-Payment of Premiums: If you fail to pay your premiums on time, then your insurer is under no obligation to do business with you. As a policyholder, you agree to pay premiums in exchange for your insurer covering risk. If you don’t pay, then your insurer could deny future claims or cancel your policy altogether.
• Low Credit or Prior Claims: Sometimes, insurers deny you because of personal risk factors. You may have too many claims on your record over the last 10 years, for example. Or, you may have a low credit score. Studies show homeowners with a low credit score are riskier to insure than people with a high credit score. Insurers check LexisNexis’s Comprehensive Loss Underwriting Exchange (CLUE), which saves up to seven years of auto and personal property claims, to determine the risk of assigning a policy.
• Other Insurance Contract Violations: Maybe your property isn’t up to code. Maybe you’ve been warned to repair your roof but haven’t done so. As a policyholder, you have an obligation to abide by certain terms of your insurance contract. Failing to abide by these terms could lead to non-renewal.

Steps to Take After Insurance Denial or Non-Renewal

Has an insurer turned down your business? Did your insurer fail to renew your policy?

Fortunately, you’re not out of luck. You have several options available, including:

1. Shop around from different insurers
2. Buy specialty insurance coverages or endorsements
3. Use your state’s insurer of last resort

1) Shop Around from Different Insurers

Some insurers don’t like doing business in certain areas. Some insurers have different risk models.

If one insurer turns you down, you may be able to purchase insurance from another provider.

State Farm, for example, canceled tens of thousands of insurance policies in California in 2024 in response to rising wildfire risk. Other insurers, however, looked at the same data and decided to renew thousands of policies. These insurers continue to do business in California – and other high-risk areas – because they continue to make money.

Shop around. Compare quotes online. Talk to an insurance agent.

2) Buy Specialty Insurance Coverages or Endorsements

You may be unable to buy insurance coverage through ordinary insurers with ordinary policies. However, you may be able to buy coverage through specialty insurers – or by adding endorsements to a policy.

Some of the specialty insurance options include:

• Buy flood insurance from FEMA’s National Flood Insurance Program (NFIP)
• Add endorsements to your policy for windstorm coverage, high-value items, and other costs that may not be covered by insurance
• Work with Chubb, Lloyd’s, and other specialty insurers
• Check for insurers specializing in vacant homes, seasonal homes, vacation homes, and other unique properties

Use Your State’s Insurer of Last Resort

Each state has a Department of Insurance. One of the jobs of the Department of Insurance is to set up an insurer of last resort.

The insurer of last resort insures people who are unable to obtain insurance through the open marketplace.

Here’s how the insurance of last resort works in most states:

• Every insurer in the state must join an insurance pool.
• If a policyholder is unable to obtain auto or home insurance through the open marketplace, then the policyholder joins this insurance pool.
• When a policyholder joins the insurance pool, the state’s Department of Insurance assigns a company to cover the policyholder.
• Insurers are required to cover this policyholder. They cannot turn down the policyholder.
• Insurers cover policyholders based on their market share in each state. If State Farm covers 30% of policyholders in Texas, for example, then they would insure roughly 30% of policyholders in the insurance of last resort pool.
• Insurance of last resort tends to be basic coverage – say, to meet minimum mortgage or car insurance requirements. However, it allows policyholders to get coverage when they’re normally unable to do so.

Some insurance of last resort options include:

• States with Fair Access to Insurance Requirements (FAIR) plans, including California, Illinois, Connecticut, and 20+ other states
• Hawaii Property Insurance Association
• Indiana Basic Property Insurance Underwriting Association
• Florida Citizens Property Insurance Corporation
• Georgia Underwriting Association

If you’re unable to obtain insurance through the open marketplace, check with these insurers of last resort to get coverage.

Struggling with a denied insurance claim? ClaimsMate can help. Contact ClaimsMate today for a no-cost consultation with a public adjuster who represents your best interests – not your insurer’s bottom line.

Stephanie Corona

Stephanie is a property insurance claim expert with over 20 years of experience working as an insurance adjuster, expert witness, appraiser and umpire. She is passionate about sharing her expertise, knowledge, tips and training to help both property owners and Public Adjusters in their pursuit of effectively managing claims and recovering the claim settlement they deserve after a loss.