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Why Is My House Difficult to Insure?

By the Mercury Team

Whether you’re currently a homeowner or considering becoming one, it’s a good idea to get homeowners insurance. It’ll protect your house and property, as well as your loved ones. However, many factors can classify your home as uninsurable. As a result, you may receive higher premiums and rates or get denied homeowner insurance altogether.

Keep reading to learn more about hard-to-insure homes and your options to get homeowners insurance.

What Makes a Home Uninsurable?

Numerous factors can make your home uninsurable. Here are some common examples:

Location of Property

Can you be denied homeowners insurance if your home is in a high-risk area? Yes, you can. Here are some of the most common reasons why your property’s location could be deemed high-risk:

  • High Crime Area: If your house is in a crime-ridden location, insurance companies will be hesitant to provide coverage for you. Why? You pose a significant risk for filing burglary or vandalism claims, which can cause property damage and loss. Consider installing a security system to improve your chances of getting insured.
  • Weather: Homes in flood plains or areas susceptible to tornadoes and hurricanes can be considered high-risk locations. Insurers see a good chance for property loss, resulting in more money to settle those claims. All is not lost, though. You can take preventive measures like installing hurricane shutters and waterproofing to help decrease your risk.

  • Natural Disasters: Insurance companies typically help cover home and property damage from a wildfire. However, coverage may vary by location and policy. This is especially true in areas like California, where wildfires are common, so you may need to shop around to find the best natural disaster coverage. When it comes to earthquakes, your homeowners insurance will not cover it. You’ll need earthquake insurance if you live in a high-risk area.

  • Fire Department: If you live too far away from a fire department or the roads leading to your house are heavily populated, insurers will see that as a high risk. In case of a fire, firefighters will have difficulty getting to your property and won’t extinguish the fire as soon as possible. Therefore, insurers will be reluctant to provide coverage because there’s a high risk of property damage and loss.

Unsafe Conditions

Even if your home’s location isn’t hazardous, the property itself might be. Here are some key home features that insurance companies may deem unsafe:

  • Building materials: Insurance companies will often evaluate the types of materials used to build the house and the property’s structure. For example, frame construction houses burn more quickly and completely than brick veneer houses. Therefore, you may pay a higher insurance rate if you own a frame-construction home.

  • Dog breeds: While you may love your pup, insurers have a different relationship with man’s best friend. Many insurers will increase rates or won’t provide homeowners insurance if you own certain “aggressive” breeds. When discussing your policy with an insurer, have details about your dog’s breed and history ready.

  • Swimming pools: As fun as they are, swimming pools are risky in insurers' eyes. Most insurance companies classify pools as an “attractive nuisance” — an appealing yet hazardous object that may put children in danger. If you have a pool, you most likely won't get denied homeowners insurance if you install a protective fence or gate around it. However, it'll increase the cost of liability protection.

  • Wood-burning stoves: A wood-burning stove can minimize energy costs and be an aesthetically pleasing feature. However, it can increase homeowners insurance premiums. There are actions you can take that can help lessen insurance costs. You can provide proof a licensed contractor installed your stove. Additionally, you can install a fire detector and keep a fire extinguisher near the stove.

Credit Score and Credit-Based Insurance Score

Like landlords and property managers, insurers will analyze credit scores from the three credit bureaus to determine your financial reliability. A poor credit score typically means you’ll have to pay higher premiums. However, if your credit score is really low, you might get declined high-risk home insurance altogether.

Insurers may also analyze a type of score called a credit-based insurance score (CBI). It’s similar to a credit score in that it offers a glimpse into your financial history. However, a CBI score also gives insurance companies an idea of how likely you are to file a claim. People with higher CBI scores tend to receive lower insurance premiums and rates — and vice versa.

There is no one-size-fits-all formula for calculating a CBI score since it varies among insurance companies. Generally, the two main factors for determining a CBI score are your previous credit performance and the amount of outstanding debt you carry. If you can fix these two areas, your CBI score can improve, and you’ll be less likely to pay higher premiums and rates.

Claims History

Most insurance companies will be hesitant to provide coverage if you have a history of excessive claims — more than two claims in the last three years.

Every time you file a claim, your insurance company reports this information to either the Comprehensive Loss Underwriting Exchange (CLUE) or the Automated Property Loss Underwriting System (A-PLUS). If you want to switch insurance or take out a new policy, insurers reference one of these two databases to check your claims history. Be aware that insurance claims typically stay on your record for five to seven years.

It’s not just the number of claims that can affect you but also the types of filed claims. Here are some of the most common home insurance claims that can impact your premium or coverage eligibility:

  • Liability: Claims that involve personal injury can increase insurance costs. Some common examples include dog bites and pool accidents.

  • Water damage: Insurers usually see water damage claims such as burst pipes and flooded appliances as preventable. Therefore, your insurance may cost more.

  • Theft: If you have a couple of theft claims on your record, insurers might think you’re not taking the measures to prevent further incidents.

  • Fires: Fire damage claims cost a lot of money for insurance companies, so you may get higher premiums or rates.

Age of Property

Older homes have charm but generally come with their fair share of maintenance issues. Your house may have an aging electrical system, cracked foundation, or leaky roof. Whatever the case — or cases — may be, insurers might raise your premiums to help offset the cost of potential claims. They may even deny you homeowners insurance if you don’t update or repair your house.

The easiest way to help reduce your premium on your older home is to select a higher deductible. Raising your deductible to $5,000 or more means the insurance company will pay less if you file a claim. The higher the deductible, the lower the premium.

Also, you should be smarter with your claims when owning an older home. It’s better to pay out of pocket for minor instances such as a broken window or busted appliance to avoid increasing your insurance rate.

High-Risk Homeowners Insurance Options

Can’t get homeowners insurance? You may be able to fix the situation that deemed you or your home high risk. Here are a few options:

Make Home Improvements

Your home might be more acceptable to insurance companies if you make improvements to your home, especially if it’s a fixer-upper house. It's also a good idea to ask your neighbors how they got homeowners insurance. Here are some things you can do to improve your chances of getting insured:

  • Roofing: Whenever an insurer inspects your house, they’ll assess the age of your roof. Many insurance companies consider homes high-risk if the roof is over 10 years old because it’s vulnerable to weather damage and leakage. A roof upgrade can significantly impact your insurance rate, especially if you live in an area prone to hurricanes, hail, and wind. Generally, the newer the roof, the more the insurance company will cover to replace it. Consider installing features such as high-quality shingles, waterproofing, and hurricane straps. You can receive substantial discounts on your premiums by employing robust roofing materials.

  • Fencing: Installing a new fence around your house can reduce the risk of potential liability lawsuits, especially if you own home features like trampolines, pools, and swing sets. These features bump up your insurance rates, but fencing can help offset the insurance cost.

  • Security system: Installing a home security system is a great way to help reduce your rates. To maximize your discounts, install a home security system with central monitoring from emergency services. Many modern security systems have sensors that detect water leakage or freezing pipes, so it’s worth the investment to help protect your property and lower your insurance bill.

  • Electrical wiring: A deteriorating electrical system is a sure way to raise your rate because insurance companies see this as a fire hazard. It’ll take time to replace things like breaker switches and fuse boxes, but it’s worth it to improve your home’s safety and insurance savings.

  • Plumbing: If your plumbing system is outdated and you deal with leaky water fixtures regularly, you can expect to pay a high insurance rate. Insurance companies see this as a flood hazard, so it’s worth upgrading your pipes and plumbing to meet current standards.

  • Emergency generator: Having an emergency generator can help prevent further damage in a power outage and provide savings on your insurance rate. Additionally, installing a generator can boost your home’s resale value.

  • Windows: Adding shatterproof windows and storm shutters can help reduce your insurance rate, especially in areas susceptible to natural disasters.

Consult with Your Insurance Agent

If you want some insight on why you’re having difficulty getting homeowners insurance, talk with your insurance agent. They’re knowledgeable about insurance ineligibility and can provide a solution for your situation. And if you’re looking for affordable homeowner insurance without compromising quality, Mercury is the perfect solution for your needs.

Contact us today to get a fast, free homeowner insurance quote!

Mercury Team

The Mercury Marketing Team is made up of professionals in the fields of Content Creation, Public Relations and Social Media. The team works together to deliver professionally written and researched content to provide information for consumers.

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