Here’s What You Should Do If Your Insurance Company Drops Your Fire (or Flood) Coverage

Currently Los Angeles County suffers from apocalyptic scenes of deadly, uncontained wildfires. Unfortunately, insurance doesn’t function like a gas or electric company; even in the face of disaster, insurers aren’t obligated to service your home. Instead, these companies can choose which properties they’re willing to insure based on their risk assessment models. This selective coverage has become increasingly common in areas prone to natural disasters, particularly in regions facing heightened wildfire or flood risks. While getting a cancelation or nonrenewal notice can be stressful, there are a few steps you should take before you accept force-placed insurance. Here’s what you can do.

Make sure you review your notice carefully. Document both the date you received the notice as well as the effective date of cancelation/nonrenewal. Identify the specific reason(s) given for the coverage change, and then check if the notice complies with state notification requirements.

From here, contact your insurance company:

• Request a detailed written explanation if not provided.

• Ask about specific risks or issues that led to their decision.

• Inquire if any property improvements could change their decision.

As always, get all communications in writing for your records. And make sure you understand—and fight for—your rights here. You could be entitled to a grace period, or your state may require insurers to help you find new coverage. If they don’t do these things, document any violations of state insurance laws.

Another place to turn is your mortgage agreement’s insurance requirements. Contact your lender to discuss the situation, and request additional time if needed to secure new coverage.

State-based insurance options

In the face of your coverage dropping you, look into these national and state-based insurance programs:

California FAIR Plan

New York FAIR Plan

Florida Citizens Property Insurance

• Last-resort coverage for Florida residents

• Must prove inability to find private coverage

• Special assessment risks during major disasters

Texas FAIR Plan

• Basic coverage for qualified properties

• Available after two private market rejections

• Requires property maintenance compliance

National Flood Insurance Program (NFIP)

• Building coverage up to $250,000

• Contents coverage up to $100,000

• Available in participating communities

• Covers direct physical flood damage

• Property must be in NFIP-participating community

• Coverage effective after 30-day waiting period

• Must meet minimum floodplain management standards

• Annual premium based on flood zone and coverage

You can also look into private flood insurance options, which often provide shorter waiting periods—at a higher cost, unfortunately. Whenever you’re looking to buy insurance, you can look into policy bundling, aka combining multiple policies for better rates. In this case, do some research to work with insurers specializing in high-risk properties.

What else to do if you live in a high-risk area

The risk of losing your physical home makes your community, and the people in it, all the more important. Join local disaster preparedness groups and engage in local emergency planning. You could join or start building neighborhood insurance pools, community-based catastrophe insurance, and other sorts of DIY safety nets for when insurance companies fail you.

In terms of your own finances, natural disasters are one of the top reasons to maintain a robust emergency fund. Remember that while losing insurance coverage can be alarming, there are usually multiple options available. The key is to act quickly, understand your rights, and explore all possible alternatives before accepting more expensive or limited coverage options.

If you’re looking to help the tens of thousands have fled their homes in California this week, you can visit redcross.org, donate to support United Way’s efforts here, or the California Community Foundation’s Wildfire Recovery Fund here.