Why Your Home Insurance Application May Be Denied

If you’re a new homeowner or are shopping around for a new home insurance policy, then you know how daunting the application can feel. With so many areas to keep track of, it can feel overwhelming with how much goes into applying for insurance and getting your policy approved. 

At Berry Insurance, we know all too well the many areas insurance underwriters will be looking at when choosing to approve or deny coverage on a homeowner’s property. We also understand how frustrating it feels when you’re denied coverage on your new or existing home. 

While each insurance carrier will assess the risk of insuring you and your home differently, we find that there are common reasons homeowners are denied coverage. Keep reading to learn the top reasons applications are denied so you can know what carriers are looking out for. 

Table of contents: 

• What makes a home uninsurable? 
• What makes a homeowner uninsurable? 
• What can I do if my home insurance application is denied? 

What makes a home uninsurable? 

Since your home is as unique as you are, there are numerous factors that go into determining whether or not an insurer will approve your application. 

The following are key factors about a home that home insurance providers will look for to determine if your home is too risky to insure. 

Hazardous home features

While some unique exposures in a home will only increase the premium of the policy if coverage is approved, others will raise red flags to an insurer that a home is too risky for them to insure at all. 

This can be due to them being associated with a higher risk of claims, or expensive replacement cost in the event of a claim. 

Examples of hazardous features in a home that could limit the approval of your application include: 

• Wood-burning stoves: These can pose a fire-risk to your home, insurers may not want to insure homes with them or only after they have been properly inspected. 
• Home-based businesses: Increased foot traffic in your home for business use makes you more susceptible to claims, be sure to look into insuring your home-based business. 
• Knob and tube wiring: An outdated and expensive component to replace, most insurers will require updated electrical wiring to be approved coverage.
• Swimming pools: Pools and hot tubs/Jacuzzis can present a potential liability, insurers may require fences and other safety measures are put in place before approving coverage. 
• Trampolines: Due to the risk of injuries, insurers usually won’t write policies for homes with trampolines, but some may if proper netting is put around the trampoline. 
• Oil tanks: Homes with underground oil tanks will be denied coverage until they are replaced with a safer option.
• Tree limbs: If you have tree limbs hanging next to or over your home, insurers will be quick to deny coverage until they are trimmed/removed. 

These examples may not result in your application being instantly denied with every carrier, as some may assess their risks differently. However, if you are approved for coverage, these hazardous features could increase the premium on the policy. 

Location

Your home's location plays a great deal in determining its home insurance eligibility. If your new or current home is in a high-risk location, insurance companies may be more inclined to deny coverage. 

High-risk locations that insurers may not want to cover can include homes in areas with high crime rates, coastal regions, flood zones, dangerous weather zones (such as hurricanes or tornadoes prone areas), and homes too far away from a fire station or hydrant. 

If your home is in a high-risk weather zone and you are approved for home insurance coverage, you may need a separate policy for protection - such as flood insurance or hazard insurance. 

Age

When looking to insure an older home, insurers will be quick to deny coverage if the home has not been properly maintained as it has aged. Older homes are more likely to experience structural problems or be made up of expensive materials that would be costly to replace or repair. 

Certain carriers even have restrictions based on homes built before a set construction date. Generally homes nearing the triple digits will receive heavy restrictions on coverage or have their application denied. 

Important areas to update when looking to insure an older home include the wiring, plumbing, heating, and roofing. Roofs especially are currently a common reason for insurers to deny coverage - specifically roofs over 15 years old. Insurers are now known to carry out inspections of roofs via drones sent to survey your roof and property for any damage. Because these inspections can be sudden and unforgiving, we recommend making sure to maintain the condition of your roof and trim any nearby tree limbs that could concern insurers. 

For additional information on what you should know when looking to insure an older home, read this guide: Things to Keep in Mind When Insuring Older Homes.

What makes a homeowner uninsurable? 

While we’d like to say not being approved coverage wouldn’t be your fault, it just might be. Besides looking at the home itself, insurers will be judging the applicant to gauge the risk of insuring them. 

The following factors are the main reasons insurers will be less inclined to offer your coverage.

Claims history

Applicants with a long history of filing insurance claims, especially recent claims, will be less likely to have their policy approved over policyholders with none or very few past claims. 

Besides the number of claims filed, certain types of claims will stand out to insurers more than others. Specifically, claims related to lawsuits - like someone getting hurt on your property - will raise more red flags to insurance underwriters when you’re applying for home insurance. 

Insurance score

Insurers use this three digit number to help predict the risk of a client and the likelihood they will file a claim. Individuals with lower insurance scores tend to cost insurance companies more, marking them as a higher risk to insure. 

Insurance scores are heavily swayed by your actual credit score, as insurers have seen correlation between low credit scores and a higher likelihood of filing insurance claims. In addition to your credit score, insurers will use several factors to determine your insurance scores, including: claims history, payment history, any recent bankruptcies, and more. 

However not all states use insurance scores the same way, as some will restrict insurance companies from basing their decision to approve policies based on the score. Massachusetts, for example, does not allow carriers to base their underwriting, premium rates, or decision to renew a policy based on credit based scores like insurance scores.

For a further breakdown on insurance scores, read this guide: What Are Insurance Scores? (And How They Influence Your Insurance Policies)

Criminal convictions

Insurance companies will assess the trustworthiness and responsibility of a potential policyholder. Unfortunately, if you have a history of criminal offenses, you may have limited appeal in the eyes of insurers. 

Recent crimes would be prioritized more than those that happened a long time ago, but insurers will judge severity of crimes differently. However, when applying for homeowners insurance, insurers would likely prioritize any history of crimes related to property damage or property misuse. 

Pets

It’s not just your own claims history that will affect your insurance prospects, but your pets as well! While we know pets are a valuable part of any family, pets with a history of aggression/biting or being on a list of banned breeds could lead to your application being denied. 

Owning certain breeds of dogs, cats, or exotic animals may make insurance underwriters wary to approve coverage for your home. For more on how your furry or scaly friends will be covered by your policy, read this article: Does Homeowners Insurance Cover Animals? (Dogs, Cats, Chickens, and Exotic Pets).

What can I do if my home insurance application is denied? 

If you recently had your home insurance application denied, either for the reasons listed above or any other, know that all hope is not lost! 

Working with your trusted insurance agent or broker can help to determine the reason for your coverage denial and then help you decide what your next steps should be. Occasionally applicants can simply be denied due to lack of information or misunderstanding and reapplication may be possible. 

We recommend addressing any problem areas in your home and making the necessary improvements before reapplying to another carrier. 

If you still find yourself unable to receive coverage through standard means, there are other options available to you. In Massachusetts, homeowners who cannot obtain coverage through a traditional insurer can receive limited insurance coverage through the FAIR Plan. To learn more about this type of coverage, read this guide: Is FAIR Plan Insurance Right for You?

Protecting your home 

Getting your property insured is an important (and required) step for any homeowner to take - making it all the more frustrating when your application is first denied. 

Now that you know more about the many areas insurance underwriters will be inspecting when reviewing your application, you can hopefully plan your next renovation, update, and reapplication with a new carrier.

With insurance prices rising, it’s important for you to know the best ways to save money on your policy if your reapplication is approved. For our top tips to save on your home insurance policy, read this article: Ways to Save on Homeowners Insurance (Home Insurance Tips and Discounts).