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What are my rights for nonrenewal, cancellation of homeowners’ insurance policy in CA?

Previously, we began looking at growing but apparently still manageable problem of homeowners’ policy termination due to the risk of wildfire here in California. As we said last time, insurance companies are within their rights to assess their risk and make strategic decisions about who they will cover and who they won’t, but it is important to understand that policyholders also have rights when it comes to nonrenewal and cancellation.

First, with respect to cancellation—under California law, the first sixty days of homeowners’ insurance coverage are treated like a trial period wherein a policyholder can be cancelled for any reason. After the sixty day period has expired, insurance companies may only cancel for certain reasons, including: material misrepresentation; physical changes to the insured property which increase hazards; or nonpayment of premium. 

If an insurance company does choose to cancel a homeowners’ policy, it must provide notice of cancellation at the policyholder’s last known address according to the number of days provided in the policy. The reason for cancellation must be provided at least 20 days prior to the cancellation.

For nonrenewals, notice must be provided at least 45 days before the expiration date. Failure to provide adequate notice gives the homeowner the right to retain the existing policy, without changes in terms and conditions, for 45 days from the date notice is sent.  

Homeowners who have had their rights regarding cancellation or nonrenewal violated should, of course, work with an experienced attorney to address any concerns and issues they may have. Depending on the circumstances, the costs of having homeowners’ coverage unfairly cancelled or terminated could be significant, and an experienced advocate can help seek out appropriate legal action.

Source: California Department of Insurance, “Residential Insurance: Homeowners and Renters,” Revised May 2016. 

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