What to Do If You Can't Get Homeowner's Insurance?

These days, premium costs are escalating at double-digit rates. Many insurance companies are tightening renewal policies, and in some states, are no longer offering new policies. This can make purchasing and keeping your homeowners insurance policy more difficult.

Some factors that can affect your ability to obtain homeowners insurance are:

• Location. If your home, or one you are thinking of buying, is considered high-risk, meaning it might be prone to hurricanes, windstorms, tornadoes, or hail; this can greatly affect whether an insurer will cover you, and if so, whether it will be affordable. Homes in high-crime areas are also prone to coverage issues.
• Age. If your home, or the one you are thinking of buying, has old plumbing, electrical or heating systems that present a higher chance of property damage, this can also make obtaining coverage difficult and expensive.
• Credit. Unfortunately, your credit history can affect whether you are insurable, and in many cases, affect the rate you pay for premiums. Through the years insurers have found a person's credit information to be a highly accurate predictor of risk, according to the Insurance Information Institute. While the factors that insurers and lenders look at are the same, each weighs them differently. If you suspect your credit history is the reason you are denied insurance, be sure to get a copy of your credit report. Make sure it is accurate. Better yet, check your credit reports before you apply for insurance.
  If you have attempted to obtain insurance from two or more different companies, but were denied coverage, there are some options available to you. If you are buying a new home, check with your real estate agent, lender, or builder, for a list of companies that write policies in your area. If the home you are purchasing is an existing home, ask the previous owners which company insured the house. In any case, ask your current insurance agent or representative for assistance. Find out why you were denied coverage. If the problem is not related to your home's location, but perhaps its condition, ask them what you need to do to bring the house up to insurable condition.

You can also contact the Institute for Business and Home Safety for information on natural hazards, community land use and ways you can protect your property from damage. You can visit them online at http://www.ibhs.org.

Another option is to talk to your neighbors. Find out through which company they are insured. Talk to their agents about specific risks in your neighborhood.

Give your state insurance department a call. Usually, they can provide you with insurers in your area. You may have to get insured through a state-run risk pool, operated by 29 states and the District of Columbia.

If you are still unable to get insurance, find out if your state has a plan known as shared market. FAIR Plans (Fair Access to Insurance Requirements) are insurance pools that sell property insurance to those who can't get it in the standard market. FAIR Plans can cost more and may provide less coverage than a typical policy, but they offer protection that you would not have otherwise. About 12 states have some sort of a homeowners policy, including liability. In California the plan covers brush fires, and in Georgia and New York they provide wind and hail coverage for some coastal communities.

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