Critical Factors for a Property to be Considered as a High-Risk


According to the official U.S. Census Bureau, over 63% of Americans live in their own homes. This means that the vast majority of the properties are adequately insured. However, certain factors decide whether a property is eligible for full coverage insurance or not.

In the following post, our experts have compiled a list of all the factors that are responsible for the deeming of a property as high-risk for the benefit of all the homeowners. But, do keep in mind that there are still options for homeowners insurance for high risk customers.

The truth is whether or not your property is a high-risk one is entirely dependent on the location. Some localities are prone to natural disasters, whereas others are prone to criminal activity due to the neighborhood.

Some reasons justify the reluctance of an insurer to take on the risk of insuring your property. In case you have insurance, and it is cancelled all of a sudden, then you have to understand that the magnitude of the risk has changed according to the risk assessment done by your service provider.

The following is a list of all the reasons as to why your home or property can be listed as a high-risk when it comes to insuring the premises.

When is a property deemed to be of high-risk?

After a thorough inspection

At times the home insurance gets cancelled after a review. This might happen during the preliminary inspection before you get the property insured or for the existing insurance during the examination at the renewal period. Either way, it is awful news.

When an underwriter inspects the property and deems it at risk, there are several possible reasons including fire hazards, leaky and faulty installation of pipes, kitchen and utilities. If there is structural damage to the property, then the policy can get revoked as well. However, you can get back your insurance coverage after a thorough repair and restoration work on the property.

Roof damage or the age of the roof

Most of the homeowners do not know that the roof has an average age after which it needs replacing or at the very least repair work. If you are moving into an old building or property, this is even more essential. According to experts, the average life expectancy for a roof is around 20 years. If the roof is older than that, then a repair and restoration work is in order. If the structural integrity of the roof is compromised, then your insurer is justified to cancel the policy stating your property as a potential health hazard due to owner negligence.

Multiple claims

If you have been filing numerous claims for your property, then your existing insurance plan might get cancelled by the service provider. This is simply because multiple applications mean there are multiple risks at your property, which makes it unsuitable for living. If your policy isn’t cancelled after deeming the property as unsafe and high-risk, you might be required to pay higher premiums.

If your auto insurance and home insurance is bundled together, you might end up losing both. So it is crucial for the homeowner to understand the pros and cons of bundling before going for the option. This is the only way to ensure that you get the best out of your investment.

When you are living in a high-risk area

An insurance provider or institution might decline your appeal for an insurance based on the grounds of a high-risk area. The locality is assessed based on its history of crime or natural calamities by an expert. Areas that are prone to tornadoes, earthquakes, severe rainstorms and coastal regions are mostly the areas that are deemed unfit for homeowner’s insurance.

Often the crime factor of an urban or suburban area is also taken into consideration since a locality might be prone to break-ins and burglaries. Keep in mind that the service provider will not deem the property to be a high risk after just one year but will keep data and record patterns to make the risk assessment. It all comes down to the history of the area, history of claims on the locality/property/homeowner and the classification of the type of risk prevalent in the neighborhood.

High-risk due to pets      

Certain pets might deem your property unfit for homeowner’s insurance. This is mainly because the homeowner’s insurance doesn’t cover the property solely but also the people living inside and the household items. So, household pets are included as well. However, each insurance institution and service provider maintains a list of animals that won’t get insured under strict company policy.

Usually, exotic pets like the Boa Constrictor and various dog breeds like Cane Corsos are exempt from the insurance. If you have one of these living on your premises or you are planning to get yourself one, check the laws at the local civic body or the insurance service to avoid cancellation of the policy.

Missing on premiums

If you are in the habit of not paying your premiums on time, then your insurance is liable to cancellation. Not only will the property be deemed at high-risk, but you will also be as well. If you do not pay your premiums on time, the insurance firm will consider you high-risk and cancel any existing policy altogether. Also, make sure to avoid filing multiple claims with the service provider.

There are certain basic good practices to follow while making the premium payments. There is no reason to fall behind schedule while making the payments since most of the service providers offer a lot of leeway when it comes to making the payments including a 30-day grace period after the due date.

In case you have bad credit

Having bad credit is like a red flag that will ensure that a majority of insurance service providers doesn’t insure your property. It might not affect the eligibility of the coverage outright, but you will inevitably end up paying more than what is typical and expected. Always make sure of the affordability before investing.

Those are all the points that make your property a high-risk one. Keep tabs on all these factors while making a new purchase of a property to avoid risky ventures.