5 things that could cancel your home insurance
Property insurance, although it is not always Having home insurance is highly recommended to protect what is perhaps your greatest asset, your most important investment, and your home and that of your family. Unfortunately, it's a common misconception that once you've purchased a home insurance policy, you have coverage for anything and everything under the sun—and as long as you keep making payments, you'll continue to have that protection. There are a number of actions (or inactions) that can lead to your claims being denied or even your insurance policy being canceled altogether. This also applies to condo and tenant insurance.
Here are five things that could lead to the cancellation of your home insurance:
- Lack of proper home maintenance,
- Criminal activities,
- Omitting vital information about your home,
- Leaving your property vacant and without a caretaker, and:
- Home-based business or commercial activity.
Read on to see how these factors can invalidate your home insurance.
Lack of proper home maintenance
Your home insurance will not cover claims for damages resulting from general lack of maintenance, normal wear and tear, and neglect. You—as the homeowner—are responsible for maintaining your property in the best possible condition. This means conducting regular inspections, cleaning, checking for damage and making minor repairs where feasible, landscaping, roof maintenance, and so on. These responsibilities are expected of you by your insurer. Failure to fully fulfill these obligations may result in claims being denied or your insurer cancelling your policy altogether.
Regularly review your policy and insurance documents to see what is expected of you as a landlord. If you are unsure, a broker is a good resource to discuss your responsibilities.
Criminal activities
It should go without saying, but any illegal or criminal activity taking place in your home can lead to the cancellation of your home insurance policy. Most property insurance policies will include a clause that excludes criminal activity from coverage, so you won't be protected if damage is caused by illegal actions. If you carry out these activities in your home, your insurance policy can be canceled. Here are some examples of illegal activities:
- The production, cultivation, harvesting, storage, possession or distribution of illegal substances, drugs or narcotics.
- Intentional damage or harm caused to a third party, their property, or even your own property.
- Modifying your home to allow the cultivation or storage of illegal substances.
Even if you were unaware of these activities, you could still risk having your home insurance cancelled. As a homeowner, you are expected to be aware of what is happening within the walls of your property.
Omitting vital information about your home
As the policyholder, you are required to disclose as much information as possible about your home, including any changes or alterations you have made or plan to make, or any unique features. You must inform your broker of major changes, such as leaving your home vacant while awaiting a new tenant, renovations, the purchase of higher-value items, the purchase of a pool or trampoline, new tenants, or listing your home on Airbnb.
Even if it's a small change, you should still update your broker and/or insurance company if you're unsure. You'll be asked about your home's characteristics when insuring your property, including things like the type of construction, electrical, plumbing, and heating systems, rental units, high-risk features like pools or hot tubs, the roof, and so on. Avoid lying or omitting anything important, because your home needs to be insured for its current condition, and leaving anything out could result in your claims being denied or your policy being canceled altogether.
Leaving one's home vacant and without a caretaker
While it depends on your insurance provider, most property insurance policies require you to have a caretaker, neighbor, friend, or family member check on your home every 48 to 72 hours. This number varies by provider, so be sure to check with yours to see what the required interval is. You are also generally required to inform your broker if your home will be temporarily vacant.
Are you going on holiday? You can do that, but you still need someone to check on your house from time to time, because empty houses are much more attractive to thieves and damage that may start small can accumulate over time.
Home-based business or commercial activity
Home insurance is personal insurance, meaning it only covers normal living conditions. Businesses present additional risks that are covered by separate business insurance policies, which means your home insurance won't cover you if business activities cause damage to your home or to a third party.
If you have a small start-up or home-based business, you may be eligible for an endorsement known as a home business endorsement. This can extend your existing coverage. However, you may not be eligible, or your insurer may not offer this coverage—in which case you will need to purchase a separate business insurance policy to cover your business operations.
Always inform your broker of any major life changes or events. If you start a business or have switched to working from home, let your broker know! Building a trusting relationship with your broker is the best way to ensure your claims aren't denied and that you can maintain your insurance history for years to come.