Policy cancellations: You can’t fire me, except when you can p2

We have started the new year off with some information about mid-term cancellations of homeowners insurance policies. It is not exactly an upbeat topic, but it does offer fodder for resolutions. If you are truthful on your application, pay your premiums and follow the insurer’s instructions about repairs, you shouldn’t get the dreaded notice of cancellation.

In our last post, we were talking about the Florida statute that bars insurers from canceling homeowners insurance policies if the policyholder files a claim for damages caused by a hurricane or wind storm. There is a major caveat, however: If the insurance company recommends certain repairs or alterations that will prevent the same kind of damage in the future, the policyholder should follow the advice. If he doesn’t, the insurance company can legally cancel the policy.

Essentially, it is OK for an insurance company to refuse to pay for the same damage over and over again when both the insurer and the policyholder know that there are ways to prevent the damage. Your windows are blown out in a windstorm. The insurance company pays the claim, and asks that you install hurricane shutters. You never get around to it, and the following year, another hurricane blows out your new windows. The insurer should pay that claim but is allowed to cancel the policy.

The same rule applies to claims for water damage.

State law allows a little give and take between the property insurance company and the policyholder. As we have said, the policy is a contract, and both the company and the insured must hold up their ends of the bargain. It’s when the insurer tries to sidestep its obligations that policyholders should consider asking an attorney for help.

Source: West’s F.S.A. § 627.4133, Notice of cancellation, nonrenewal, or renewal premium, via WestlawNext

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