High-Risk Homeowners Insurance

High-risk homeowners insurance: can you be denied home insurance?

High-risk homeowners and homes fall into an array of categories. If a prospective homeowners insurance customer has a claim-filled homeownership history or lives near a faultline or floodplain, insurance companies to deem a homeowner "high-risk." This article explores high-risk home insurance options — including the FAIR Plan — and provides tips on how to save.

1. What makes you or your home high-risk?
2. FAIR Plan: what it is and how to get it
3. High-risk homeowners insurance companies

 

---

 

What makes a home — or a homeowner — high-risk?

There are many reasons a homeowner or a property — or both — can be considered high-risk. Below are common reasons for homeowners insurance policy denial.

You	Your Home
Previous claims history	Structural issues with your home
Owning a home business	Age of roof
Low credit score	Living in a high-risk area (crime or weather)
Criminal history	Vacant home/vacation home
Aggressive pets	Age of home

While some of these factors may seem unrelated to homeowners insurance, consider the liability portion of an insurance policy. Liability coverage kicks in if you’re deemed responsible for damage to others or their property. If your past makes you appear riskier to an insurance underwriter, the company may deny you coverage.

Some of these issues have straightforward solutions. Replacing an old roof is expensive, but it can lead to an insurance discount while improving the integrity of your home. This is true of any structural issues. Fixing these issues can re-qualify you for coverage from home insurance companies that have previously issued denials of coverage, should they verify updates are satisfactory.

Other issues, such as your claims history or the home's location, can be trickier. If you live in an area at risk of severe weather, your best option is to compare as many companies as possible. Not every insurance company treats weather-related threats as uninsurable, but they may charge you more for your homeowners policy. 

The likelihood of wildfires in a given location is a common reason homes are deemed too risky to insure. Prior to evaluating high-risk insurance companies, compare a few standard private insurers. If you’re continually denied insurance coverage, consider your state’s FAIR plan.

 

---

 

What is FAIR Plan insurance?

Although homeowners insurance is not required by law, your mortgage lender will likely require you to carry coverage. If you’re continually denied coverage, look into your state’s FAIR Plan.

The Fair Access to Insurance Requirements (FAIR) Plan — is a government-run program that aims to provide adequate insurance coverage for all homeowners.

 

What does FAIR Plan insurance cover?

You should consider FAIR as a last resort for homeowners insurance, as it offers less coverage. A typical insurance policy will cover your home from more than 16 threats, while FAIR only provides coverage against fire, windstorms, vandalism, and riot. Moreover, there's no guarantee your personal items will be covered — this just depends on your state. 

Below are FAIR coverage options compared to those of typical homeowners policies:

FAIR — Dwelling Coverage	Standard Dwelling Coverage
Windstorms	Lightning and fire
Fire	Hail and windstorm
Vandalism	Damage caused by aircraft
Riot	Explosions
	Riots and civil disturbances
	Smoke damage
	Damage caused by vehicles
	Theft
	Vandalism
	Falling objects
	Volcanic eruption
	Damage from weight of snow, ice, or sleet
	Water damage from plumbing, heating, or air conditioning overflow
	Water heater cracking, tearing, or burning
	Damage from electrical current
	Pipe freezing

 

Although FAIR is not as comprehensive as insurance provided by standard private insurers, it's better than leaving your home uninsured.

 

How to get FAIR insurance coverage

FAIR is state-specific. Below are the numbers and websites at which you can find eligibility requirements and get a quote.

 

High-risk insurance companies — alternatives to the FAIR Plan

The FAIR Plan does not provide comprehensive home insurance. Furthermore, it won't be as affordable as standard private insurance. Only consider this option if you’re continually denied home insurance. Prior to FAIR, consider these steps.

1. Determine why your insurance coverage was denied

There might be something easy you can do — replacing screens or removing debris — to make your property insurable. In other cases, you might need to replace your roof or erect a fence around your swimming pool.

2. Exclude certain perils from coverage

If your restricted-breed dog is the reason for your coverage denial, speak to your insurance company about removing your dog from the liability portion of your homeowners policy. Not every company will offer this option, but it's worth inquiring about.

3. Consider non-standard insurance companies

Major insurance companies like State Farm, Farmers, and USAA are hesitant to write policies for high-risk customers. Consider local insurance companies and other non-standard providers for home insurance coverage. See our list of the Top Home Insurance Companies that ranks both major and small insurers. 

4. If you get a FAIR Plan policy, look for supplemental insurance

If FAIR is your only option, look for supplemental insurance policies to protect your contents. This means purchasing specific coverage for certain items — jewelry, art, firearms, flooding, etc. — buying warranties, or placing your belongings in storage and purchasing insurance from your storage unit company.