Illinois Home Insurance News & Important Information

Important homeowners insurance regulations, consumer protections, common property insurance issues, and official Illinois resources.

Homeowners Insurance Is Not Required by Illinois Law

Illinois does not generally require homeowners to purchase homeowners insurance simply because they own a home.

However, if you have a mortgage, your lender will normally require property insurance as a condition of the loan.

If required insurance lapses, the mortgage company may purchase force-placed or lender-placed insurance, which can be significantly more expensive and may protect primarily the lender's interest rather than providing the same protection as a standard homeowners policy.

Home Insurance Policy Canceled

Cancellation means the insurance company ends your homeowners policy before its scheduled expiration date.

In Illinois, the insurance company must provide written notice explaining why it is canceling the policy.

For homeowners insurance, the insurer generally must mail the cancellation notice:

At least 10 days before cancellation when the reason is nonpayment of premium.

At least 30 days before cancellation for other reasons.

The insurer must keep proof that the notice was mailed, but it does not have to prove that the policyholder actually received it.

Received a Home Insurance Cancellation Notice?

Do not ignore the notice.

Common reasons may include:

Nonpayment of premium
Material misrepresentation
Significant changes in the property's condition
Increased risk
Failure to complete required repairs
Property inspection issues
Policy-condition violations

If you receive a cancellation notice, contact your insurance agent immediately.

Depending on the reason, you may have time to correct the problem or find replacement coverage.

You May Have the Right to Appeal a Cancellation

Illinois homeowners may have the right to appeal certain insurance cancellations to the Illinois Director of Insurance.

This appeal right generally does not apply to cancellation for nonpayment of premium.

For an eligible cancellation, a written hearing request generally must reach the Illinois Department of Insurance at least 20 days before the cancellation date.

Homeowners Insurance Policy Nonrenewal

A nonrenewal is different from a cancellation.

Cancellation ends the policy before its expiration date.

Nonrenewal means the insurance company does not want to issue another policy after the current term expires.

Illinois insurance companies must provide a written notice explaining the specific reason for nonrenewal.

For many homeowners nonrenewals, Illinois requires the insurer to provide notice 60 days before the policy expiration date.

Certain limited circumstances may have different notice requirements.

Received a Nonrenewal Notice?

Do not wait until the last few days of the policy.

Home insurance underwriting has become more property-specific, and replacement coverage may require:

Exterior photos
Roof information
Roof age
Electrical information
Plumbing information
Heating information
Prior insurance history
Claims history
Property inspection
Proof of repairs
Mortgage information

Contact Insurhaus as soon as you receive the notice so there is enough time to review other insurance options.

Insurance Company Requires Property Repairs

Property inspections are increasingly common.

An insurance company may identify conditions that it believes increase the risk of a future loss.

Common inspection concerns include:

Damaged or aging roof
Missing shingles
Overhanging trees
Damaged siding
Broken windows
Peeling paint
Missing handrails
Unsafe stairs
Electrical hazards
Plumbing issues
Unsecured swimming pools
Debris or poor property maintenance

Illinois law contains protections for certain fire and extended-coverage policies when property is capable of being repaired.

An insurer generally cannot issue certain cancellation or nonrenewal notices because of repairable property defects without allowing the insured a reasonable period to make repairs. The allowable period may be up to 90 days, depending on the circumstances.

Changed Deductible or Coverage at Renewal?

Insurance companies sometimes change policy terms at renewal.

This may include changes to:

Wind/hail deductible
Roof settlement
Water backup
Replacement cost
Coverage limits
Policy endorsements

Illinois law requires insurers making certain deductible or coverage changes applicable to an entire qualifying line of business to provide written notice at least 60 days before renewal or the policy anniversary date.

Always review your renewal documents.

Do not compare only the new premium.

Roof Coverage — Replacement Cost vs. Actual Cash Value

Homeowners should check how their roof is insured.

Depending on the company, policy, roof age, and endorsement, a roof may be settled differently after wind or hail damage.

Replacement Cost

Generally pays the cost to repair or replace damaged property without deducting depreciation, subject to policy terms and deductible.

Actual Cash Value

Generally considers depreciation based on the property's age and condition.

A lower premium does not always mean equivalent coverage.

Ask your agent whether your roof is insured at:

Replacement Cost
Actual Cash Value
Scheduled Roof Payment
Another roof settlement method

Wind and Hail Deductibles

Homeowners insurance may have a separate deductible for wind or hail losses.

This deductible may be different from the deductible that applies to other property claims.

For example, a policy could have:

$1,000 All Other Perils deductible

but a separate:

1% or 2% Wind/Hail deductible

A percentage deductible is usually calculated against the insured dwelling limit, not the amount of the claim.

Review your declarations page carefully.

Flood Damage Is Not Covered by Standard Homeowners Insurance

This is one of the most important property insurance issues.

A standard homeowners policy generally does not cover flood damage caused by:

Rising surface water
Rain runoff
Groundwater
Snowmelt-related flooding

Flooding can happen even outside areas traditionally considered high risk.

Flood insurance usually must be purchased separately.

Additional official resource:

FEMA — Flood Insurance

Sewer Backup and Sump Pump Coverage

Water entering a home through a sewer, drain, or sump system should not automatically be assumed to be covered under a standard homeowners policy.

Many insurers offer Water Backup or Sump Overflow coverage by endorsement.

Coverage limits and deductibles vary.

Homes with basements should review this coverage carefully.

Replacement Cost Is Not the Same as Market Value

The amount your home could sell for is not necessarily the amount it would cost to rebuild.

Insurance companies calculate dwelling replacement cost using factors such as:

Square footage
Construction type
Number of stories
Roofing materials
Interior finishes
Bathrooms
Kitchens
Garages
Labor costs
Building materials
Local construction costs

Land value is generally not part of the dwelling reconstruction calculation.

Review the dwelling amount when you make major improvements or additions.

Finished Your Basement or Remodeled Your Home?

Notify your insurance agent after major improvements.

Examples include:

Finished basement
Room addition
New kitchen
New bathroom
Finished attic
Detached garage
New deck
Major renovation
Additional structures

Improvements may increase the amount needed to rebuild the property.

Failing to update the policy could leave the dwelling limit or other coverage inadequate.

Swimming Pools and Home Insurance

Swimming pools create additional liability exposure.

Insurance companies may require safety features such as:

Fencing
Self-closing gates
Locking gates
Secured ladders
Proper barriers

Requirements vary by insurance company and local building code.

If you install a pool, notify your insurance agent.

An insurer may request photographs or an inspection.

Trampolines, Dogs and Other Liability Risks

Insurance companies may ask about property features that create additional liability exposure, including:

Trampolines
Swimming pools
Certain animals
Home businesses
Short-term rentals
Vacant homes

Illinois law restricts insurers from making certain underwriting decisions based simply on dog breed. However, insurers may take action involving a specific dog determined to be dangerous or vicious under applicable Illinois law.

Always answer underwriting questions accurately.

Vacant or Unoccupied Home

A standard homeowners policy may contain important restrictions when a property becomes vacant or unoccupied for an extended period.

This can happen when:

A home is being renovated
A property is for sale
The owner moves before closing
A rental property has no tenant
A home is inherited
The owner relocates temporarily

If your property becomes vacant, notify your insurance agent.

A vacant-home or dwelling policy may be necessary.

Renting Your Home or Using Airbnb / Short-Term Rentals

Standard homeowners insurance is intended primarily for personal residential use.

If you begin renting your property or offering short-term rentals, notify your insurance agent.

A standard homeowners policy may have exclusions or restrictions involving rental or business activity.

Depending on the situation, you may need:

Landlord insurance
Dwelling Fire insurance
Short-term rental coverage
Commercial coverage

Do not assume coverage provided by a rental platform replaces your own insurance.

Home Business Coverage

Operating a business from your residence can create insurance exposures not covered by a standard homeowners policy.

Possible concerns include:

Business equipment
Customer injuries
Inventory
Professional liability
Business income
Employees
Deliveries

Tell your insurance agent if a business operates from the home.

You may need an endorsement or separate business insurance policy.

Mortgage Company Changed?

If your mortgage was sold or transferred to another lender, notify your insurance agent.

The homeowners policy should show the correct:

Mortgage company
Loan number
Mortgagee clause
Billing information

This is particularly important when insurance is paid through an escrow account.

Failure to update mortgage information can cause payment delays or incorrect cancellation notices.

Mortgage Paid Off?

If you pay off your mortgage, notify your insurance agent.

The mortgage company should be removed from the policy once the loan has been satisfied.

You may also need to change your insurance billing method if the mortgage company previously paid the premium through escrow.

Condo and Townhome Owners — Master Policy vs. HO-6

Condo and townhome owners should understand what the association's Master Policy covers and what remains the individual owner's responsibility.

Association policies vary significantly.

Before purchasing coverage, review:

Declaration
Bylaws
Insurance requirements
Master policy
Deductible responsibility

Individual owners may need an HO-6 Condo Unitowners policy for exposures such as:

Interior property
Personal belongings
Personal liability
Loss of use
Improvements and betterments
Loss assessment

Do not assume that paying association dues means everything inside your unit is insured.

Can't Find Homeowners Insurance?

If you cannot obtain property insurance in the standard insurance market, Illinois has a market-of-last-resort option called the:

Illinois FAIR Plan

To qualify, the Illinois Department of Insurance states that an applicant generally must have been unsuccessful in obtaining property coverage from three insurance companies, and the property must meet basic fire, loss-prevention, and safety standards.

The FAIR Plan is generally intended as an alternative when regular-market coverage cannot be obtained.

Keep a Home Inventory

The Illinois Department of Insurance recommends maintaining an inventory of personal property.

Consider documenting:

Furniture
Electronics
Jewelry
Appliances
Clothing
Tools
Sports equipment
Collectibles
Holiday decorations
Other valuables

Photos, videos, receipts, model numbers, serial numbers, and appraisals can help document property after a claim.

Keep a copy somewhere outside the home or securely online.