Home Owner's Insurance

About two weeks after we moved into the new house, Allstate cancelled our homeowner's insurance. They sent us a form letter where they said that our siding had dry rot. The next day, they sent us a check for the balance of our policy. This caused me a little worry. I called our agent (who was great throughout the whole process) and she said she would find some details for us. While we were waiting for that, we panicked. We started trying to get estimates on residing the house. Tried to find another insurance company that would cover us. Residing the house would cost at least $10,000. State Farm said they would not insure us if we had dry rot. They also said they would not insure us if we fixed the dry rot because they don't insure anyone who has either filed a claim or suffered a loss in the last three years. Repairing the siding would have counted as a loss. Finally, (again our agent was very supportive throughout the whole process) the insurance inspector came back out to the house to point out the problems. He wanted us to replace about 16 square feet of siding. Our insurance policy was cancelled over 16 square feet of siding. Our agent says that if we fix it, she will be able to reinstate our policy. I fixed it this afternoon. All that's left to do is a little painting.