If you’re currently looking to insure the property you’re renting, you may be discouraged when you get denied coverage – especially when the reason you were denied insurance coverage feels out of your control!
At Berry Insurance, we often get questions from clients frustrated about why they did not receive renters insurance coverage, especially when it comes to areas they may not be knowledgeable about, such as insurance scores.
So why exactly were you denied renters insurance coverage and what can you do about it? Read on to learn the top reasons your application may be denied, how insurance scores influence your application, and how to improve your chances before reapplying.
Table of contents
- Why do I need renters insurance?
- Why was my renters insurance not approved?
- What are insurance scores?
- What can I do if my renters insurance application is denied?
Why do I need renters insurance?
While your landlord’s insurance policy would cover the building itself, having your own renters insurance ensures that your possessions are covered (subject to your coverage limits and deductible) and that you are protected financially in the case of liability or lawsuit - making the coverage crucial for anyone renting.
Why was my renters insurance not approved?
If you’ve recently been denied coverage, you may be scratching your head as to why since a lot of the times you won’t receive a specific reason from the carrier.
Insurance company underwriters will judge you as a potential client through multiple factors, using details about you, the rental property, and your insurance score to make their decision.
The following reasons are the most common reasons why someone is denied coverage on their rental property:
Location:
The location of the rental home or apartment plays an important role in determining its insurance eligibility. If the rental property 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 rental properties in areas with high crime rates, coastal regions, flood zones, dangerous weather zones (such as hurricanes or tornadoes prone areas), and properties too far from a fire station/hydrant.
Besides natural disasters spreading and becoming more common, plenty of changes each year will affect your insurance. Keep up to date with the latest changes by checking out our guide below:
Home hazards:
While some unique exposures will only increase the premium of the policy if rental coverage is approved, others will raise red flags to an insurer that a rental property is too risky for them to insure at all.
Examples of hazards could include private swimming pools or trampolines on your property as well as any deferred maintenance. While it may be your landlord's job to upkeep the property for leaky roofs or broken stairs, it could make insurers less likely to insure you as a client since the landlord's neglect could turn into a potential claim for you down the line.
Pets:
While your landlord may allow pets, it doesn’t mean insurers will always be happy to cover your furry friend. Certain dog breeds deemed “too aggressive” by some insurers will be a red flag on your application.
While we personally view this blanket assessment of certain dog breeds as antiquated (as studies have shown the dog’s owner’s behavior, training, and socialization as having far more to do with the dogs behavior than the breed alone), it cannot be denied that many carriers still cling to this belief - and will judge you because of it.
For more information on restricted dog breeds, and why we think the insurance industry should leave these restrictions in the past, read this article: Should Insurance Companies Stop Restricting Dog Breeds?
What are insurance scores?
In addition to the reasons we listed above, insurers will use your insurance score whether or not they want to insure you.
Insurance scores are a three digit number that insurance companies use to predict the likelihood a potential new client is to file a claim - essentially gauging the risk to insure you.
Your score will vary between policy type and carriers, as each will judge your risk differently based on their own algorithm. Independent agents (like us at Berry Insurance) cannot access or see this score.
Insurance scores will typically range from 100-999, with higher scores indicating a perceived larger risk to insure, and thus may be the reason you are denied renters insurance coverage. And even if you are approved for coverage, your score may still dictate the cost of your policy premium.
What determines insurance scores?
While each carrier will determine insurance scores differently, there are common reasons related to you or the property you’re renting that will increase your perceived risk to insurers, and in turn raise your insurance score.
Insurance scores are heavily swayed by your 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, insurance scores are determined by:
- History of claims - any insurance claims you have filed in the past
- Payment history - how often you make payments on time
- Amount of outstanding debt
- Length of credit history
- How often you have applied for new credit
- How many different types of credit you have
But keep in mind that carriers will calculate scores different from one another, meaning some may utilize other factors or prioritize some over others.
What can I do if my renters insurance application is denied?
If your recent application for renters insurance did not go well, keep in mind 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. Additionally, applicants may simply be denied due to lack of information or misunderstanding and reapplication may be possible.
We recommend addressing the red flags that insurers noticed with your application before applying to another carrier. Also, if you have not moved in yet to a property that insurers have deemed uninsurable for any number of reasons, consider looking for other rental options that may be easier to secure coverage for.
If you’re looking to improve your insurance score, be sure to stay on top of your bill payments, reduce your debt, and avoid new lines of credit until you are fully paid off/debt free
Renting with peace of mind
Since moving all of your possessions into your new apartment or rental home can be such a hassle, it’s crucial that you have the right coverage to protect your belongings as well as yourself.
While it may seem impossible to get approved renters insurance coverage if you’ve already been denied, you now know what insurance carriers will be looking for when reviewing your application - so you can better prepare for the next time you apply.
Once you secure coverage for your rental property, you’ll probably be wondering how much you’ll have to pay for it. To learn all about what you can expect to pay for renters insurance, check out this guide: How Much Does Renters Insurance Cost in MA?