Homeowners Insurance: What to Do If You’re Denied Coverage

With extreme weather events increasing in recent years, homeowners insurance companies have raised premiums or stopped offering coverage completely. Many of the policyholders hit with nonrenewal or cancellation notices are the ones most in need of insurance coverage.

Just six months before the devastating wildfires ripped through Southern California, State Farm canceled 1,600 policies in the Pacific Palisades community of Los Angeles.

If you live somewhere with a high risk of certain disasters, you might not be covered for very costly scenarios. That includes Californians in wildfire-prone areas, Floridians in hurricane paths and Texans in areas with a high probability of wind and hail damage.

As the nationwide insurance crisis gains more public attention, some temporary measures have been taken. For example, the California Department of Insurance issued a one-year moratorium on nonrenewals and cancellations for properties located near the recent wildfire destruction.

Here’s more on what you can do if you’ve been denied insurance on your home. 

Read more: Fires, Floods, Hurricanes and Tornadoes: Do You Need More Home Insurance for Natural Disasters?

What homeowners insurance covers

Insurance won’t cover everything. Flood damage, for example, is not part of most standard homeowners insurance policies. Neither is damage from earthquakes, mudslides, mold or pest infestations. If you have failed to maintain the property in good condition, your company can determine it’s not responsible for certain damage.

Though policies vary, standard homeowners insurance typically covers these areas:

Dwelling protection: This portion protects the actual structure of the home. If a tree falls on the roof, for example, or a vandal breaks your glass door, you can submit a claim to have your insurance company help pay for the repairs after you meet your deductible.

Personal property protection: This portion helps cover costs related to the actual belongings in the home. If the vandal who broke the glass door comes in and steals your living room furniture, personal property protection could help you buy new furniture. It’s important to note that this may not cover everything in your home. For example, if your $2 million wedding ring is stolen, this may well exceed your limits, which is why a lot of homeowners opt for additional coverage for especially valuable items.

Liability protection: This portion applies to the potential costs of an injury on your property. If someone comes to your house, falls down the stairs and winds up in the hospital, you could be liable for the damages. This coverage can help pay for those medical bills and other related costs for the victim.

Read more: Insurance Premiums Spike as Natural Disasters Strike. What Homeowners Can Do

Why you might be denied homeowners insurance

While there are a variety of reasons you might get rejected for coverage, generally when insurance companies determine a high likelihood of risk, they’ll incur more costs, and you’ll have a tough time getting approved.

Here are a few of the most common reasons homeowners are denied or dropped from coverage.

A history of claims

The most common reason policyholders are dropped from coverage is that they have lost their provider’s money. Policygenius research shows that 36% of those who lost their insurance already filed a claim or multiple claims.

High risk of natural disasters

With climate-related disasters on the rise, an increasing number of property owners living in high-risk areas have faced a nonrenewal or outright cancellation of their homeowners insurance coverage.

In 2022, Allstate announced a pause on new condo and homeowners insurance policies in California. Over the last two years, State Farm made major reductions to new and existing California insurance coverage, and in 2024, Liberty Mutual ended fire-dwelling protection for around 17,000 California homeowners. In Texas, both Progressive and Foremost (a subsidiary of Farmers Insurance) stopped renewing homeowners policies.

Some companies are pressing pause on issuing new policies, while other companies are exiting the market altogether: Around 30 insurance companies left Florida after the devastation of Hurricane Ian in 2022.

Age or condition of the home

Insurance companies also evaluate a home’s age and condition. An old home lacking updated plumbing or electrical wiring, for instance, might not qualify for a standard policy. According to Policygenius, 33% of homeowners who have been dropped from their insurance coverage failed a home inspection and didn’t make the necessary improvements.

Companies might also be wary of features that could pose potential hazards, such as nonfenced-in swimming pools, wood-burning stoves or an open pit or well in the yard. It might also be tough to qualify if you’re living in an unconventional home, such as a tiny house or yurt.

Read more: 8 Steps for Homeowners When You’re Home Is Destroyed or Damaged by a Wildfire

What to do if you’re rejected for insurance coverage

If you’re rejected for homeowners insurance, here are some steps you can take.

Find out why

Ask the company to explain the reason behind the rejection. A company is legally required to share why they denied coverage to an applicant, according to Loretta Worters, vice president of media relations at the Insurance Information Institute. “This is typically done through an adverse action notice, which outlines the specific factors that led to the denial.”

If the reason is based on something within your control, try to find a solution and apply again. For instance, you could update old wiring, install security devices or weatherproof your home to mitigate the risk of damage. 

Ask for recommendations

Talk to your neighbors to find out what insurance company they use. Locals in your area might recommend a different insurance provider.

Shop around

Every insurance company sets its own rates and requirements, so research multiple options to find one that’s willing to work with you. Your state’s insurance department should provide a list of companies that offer insurance in your area.

Explore alternative policies

If you can’t qualify for a standard insurance plan, you’re not out of options. Here are some alternatives.

State-sponsored options: Dozens of states and the District of Columbia have residual markets to offer coverage for risks that private insurers are not willing to cover. In some areas, these plans are known as FAIR, or Fair Access to Insurance Requirements, but they may go by other names. According to Worters, these plans are typically reserved for those who have been repeatedly denied by private insurance companies due to their property’s location in a high-risk area.

To qualify for state-sponsored coverage, homeowners should be prepared for an inspection to evaluate “the home’s structural soundness, potential fire hazards, security measures and overall maintenance,” Worters said. Inspectors will want to see evidence that you’ve taken preventative measures, such as creating a defensible space free of brush around the perimeter of the home and maintaining debris-free gutters. For more information on your state’s plan, check out the III’s comprehensive list of resources.

HO-8 insurance: Houses that are at least 40 years old may qualify for an HO-8 policy, which is a type of modified plan that covers specific issues, such as fire or vandalism.

Surplus lines policy: You may qualify for a policy from a surplus lines insurance company, though the coverage is usually limited, and you’ll likely have to pay a high deductible. These companies also don’t have to be licensed by the state where you live, which comes with significant drawbacks. You could be more limited in pursuing legal action against them, and if they go bankrupt, you could struggle to get your claim covered.

How to dispute an insurance denial

Even if you have a homeowners insurance policy in place, you might encounter roadblocks when you try to use it. Providers may deny your claim due to lack of coverage, insufficient documentation or another reason.

Look at the notice with the reason for your denial. If you disagree with the decision, you can take these steps to dispute it:

1. Review your policy: Carefully study your policy to see what it covers. Find out if any exclusions apply to your specific claim. If not, you may go on to dispute the decision.
2. File an appeal: Call your insurance provider and ask for a review of your claim. See if there’s any additional documentation or information you can provide to clarify the request. This might include photos, videos or a home inventory with receipts. The insurance company may send out someone to visit your home again and reassess the claim.
3. Hire an insurance professional or attorney: Seek out a professional or hire an attorney to help you navigate the process. A public claims adjuster could also review your claim and provide their opinion. However, these avenues could be expensive, and there’s no guarantee your claim will be approved.
4. File a complaint: If your insurance provider is treating you unfairly, you could file a complaint with your state’s insurance department. The department might connect you with additional resources that could help.

If you’ve been denied insurance coverage for your most valuable asset, shop around to find an alternative option. Even if you can’t qualify for a standard homeowners insurance plan, you may be able to get a state-sponsored plan or modified policy that offers some coverage in the event of an emergency.

You need more than a roof over your head. You also need financial peace of mind that the roof is protected in case anything goes wrong.

Correction, Jan. 26: Allstate announced its pause on new condo and homeowners insurance policies in California in 2022. State Farm made significant changes to its insurance policies in California in 2023 and 2024. 

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