Q: The insurance company cancelled my home insurance. Is it allowed to do this?

A: Yes, it is allowed, under certain conditions. But first, note that there is a difference between canceling your policy part-way through its term, and simply choosing not to renew it when it comes due. If you have too many claims -- at least by the insurance company's standards -- it may decide not to renew your policy.

Cancellation of your policy before its expiration date is another story. Although the insurer is not required to give any reason, it would likely cancel a policy for either of two reasons: you have not paid your premium; or you have withheld information from the insurance company about the property it was insuring.

If the insurer cancels your policy, it is legally required to give written notice, either delivered in person to your last-known address, or sent by registered mail to the post office nearest you. If the notice is personally served, the cancellation takes effect five days after it has been delivered to you. If it is sent by registered mail, as most insurers choose to do, the cancellation becomes effective 15 days after the day it is delivered to your post office. If you don't pick it up from the post office, that's your problem -- the cancellation takes effect anyway. The insurer must also refund your money on a pro rata basis for the amount of time remaining on your policy (as long as you paid your premium in the first place). In other words, if you paid for your policy for one year, and had six months remaining when your policy was cancelled, the insurer must refund you one half of your annual premium.

If your policy has been cancelled for non-payment, but you have a reasonable explanation for the mishap -- maybe you thought your payment had been made but there was a mixup -- you can ask the insurer to resume your coverage. The insurer might be willing to do so if it believes you made an honest attempt to pay the premium.

Whatever the reason for it, a cancellation is not to be taken lightly; more than likely, the company that cancelled you will submit that information to a database used to track property claims history, so it will follow you to the next insurance company you apply to. If that company is willing to insure you -- and there's a good chance it won't -- it will likely be at a much higher rate. You may even have to turn to one of the so-called "non-standard" or "high-risk" insurers to obtain coverage, at an increase in premium of two to three times what you paid in the past.