Homeowners policy canceled over Airbnb hosting? What California law allows.

Only for a reason California allows. Once a homeowners policy has been active 60 days, or from day one of a renewal, Insurance Code section 676 limits cancellation to five reasons.

Hosting is not one of them by name. In a new policy's first 60 days, the list does not apply.

These are the five reasons, in the law's order.

• An unpaid bill, including an extra charge "justified by a physical change in the insured property or a change in its occupancy or use."
• A conviction of the named insured for a crime that increases a hazard the policy covers.
• Fraud or material misrepresentation in getting the policy, or in pursuing a claim under it.
• Grossly negligent acts or omissions that substantially increase a hazard the policy covers.
• Physical changes to the property that make it uninsurable.

Two of those reasons fit hosting most directly. If your insurer learns you host, it may bill an extra charge under its rating manual, and an unpaid extra charge is a reason to cancel.

The other is the application. If it asked about renting and your answer was wrong, an insurer may call that material misrepresentation: a wrong answer that mattered to its decision.

An insurer can also wait and not renew. California law sets no list of allowed reasons for that, only the notice rules below and a few limits.

A third option is renewing with less coverage. A renewal offer must list "any reduction of limits or elimination of coverage," such as a new hosting exclusion, at least 45 days before the policy ends.

A cancellation ends coverage partway through the policy year. A non-renewal ends it on the last day, and California requires at least 75 days' notice, or 90 days beginning January 1, 2028.

A cancellation notice must be in writing. Once a policy has been active 60 days, or on a renewal, the notice must say which of the five reasons it relies on. It must also give "the specific information supporting the cancellation."

A non-renewal notice must give "the specific reason or reasons for the nonrenewal" until January 1, 2028. From that day, a new section, 676.11, requires "a detailed, plain language explanation of the grounds for the nonrenewal" instead. Either way, a state notice comes with it, pointing you to the Department of Insurance's Home Insurance Finder and the FAIR Plan.

Both kinds of notice must tell you that the California Department of Insurance can review the matter, and give its website, insurance.ca.gov. For a cancellation, that rule applies once the policy has been active 60 days, or on a renewal.

Start the day it arrives, because a cancellation can leave you less than three weeks.

Work through these steps in order.

• Write down three dates: the postmark, the date on the letter, and the day coverage ends.
• Compare them with the minimums, adding five calendar days for a mailed notice, or 10 if mailed from or to another state.
• Check your policy's cancellation section: it may promise more notice than the law's minimum.
• Find the stated reason: after a new policy's first 60 days, or on a renewal, a cancellation must name the legal reason it relies on.
• If the reason is wrong, say so in writing, with proof such as a closed listing or your booking calendar.
• If the reason is an unpaid extra charge for hosting, ask in writing whether paying it keeps the policy.
• If you have stopped hosting, tell the insurer in writing and ask whether it will withdraw the notice.
• If you believe the insurer is wrong, ask the Department of Insurance to review it through insurance.ca.gov.
• Keep copies of everything you send and receive.

Decide first whether you will keep hosting. If you will, you need a policy whose terms allow it. That can be a homeowners policy with a home-sharing add-on, or a policy written for a rental if you do not live there.

If you will stop, close your listings before you apply, and answer the new application's questions about renting accurately. A wrong answer there can lead straight back to a notice like this one.

Then search in order. Standard insurers come first, because California's guaranty fund stands behind their policies. Specialty insurers come next (the technical name is surplus lines), and that fund does not back their policies.

The FAIR Plan is the last stop for fire coverage. Its dwelling program lists homes "rented (in whole or part) for less than one year" among those it takes. Ask in writing whether the home-sharing endorsement the Plan filed in 2020 would be on your policy, because that form narrows coverage for hosting.

A FAIR Plan policy covers fire and smoke, plus wind and hail if you add them. It does not cover water damage from a burst pipe, theft, or someone getting hurt on your property. For a host, that last gap matters most, so keep looking for a replacement policy that covers all of it.

Have the new policy start on or before the day the old one ends. Overlapping the two by a day is safer than a gap.

If you have a mortgage, a gap can lead your servicer to buy insurance for you and charge you for it. Send proof of the new policy to your servicer the day it starts.