Insurance companies may refuse to insure homes that have suffered water damage for several reasons, which are generally related to the perceived risk associated with the property. Here are some key points to consider:

1. Condition of the Property: If a home has experienced significant water damage, it might be seen as a higher risk for future claims. Insurance companies assess risk based on past incidents and the condition of the home. If they believe that the property is more likely to incur water damage again or has not been adequately repaired, they may choose not to offer insurance coverage.

2. History of Claims: Homeowners who have filed multiple claims, especially for the same type of damage, may be viewed as high-risk by insurance companies. This is because the frequency of claims can indicate a higher likelihood of future claims, which is a liability for insurance providers.

3. Type of Water Damage: The source and nature of the water damage can also impact an insurer's decision. Damage from sudden, accidental events like a burst pipe is more likely to be covered, while long-term issues due to lack of maintenance or gradual deterioration may not be. Insurance policies often exclude certain types of water damage, such as damage resulting from unresolved maintenance issues or gradual deterioration.

4. Preventative Measures and Maintenance: Insurers expect homeowners to take reasonable steps to prevent water damage. If a home has a history of water damage and the homeowner has not taken appropriate measures to mitigate future risks, such as fixing leaky roofs or pipes, an insurance company may deem the property too risky to insure.

5. Policy Terms and Conditions: It's important for homeowners to understand their insurance policy's specific terms and conditions. Policies vary, and what is covered under one policy might not be covered under another. Exclusions for certain types of water damage are common in insurance policies.

In cases where a claim for water damage is denied, homeowners have the option to challenge the denial, often with the assistance of an attorney. This can be particularly relevant if there's a belief that the insurance company is incorrectly interpreting the policy or acting in bad faith.

If you're facing difficulties with insurance coverage due to water damage, it's advisable to carefully review your insurance policy, consider consulting with an insurance expert or attorney, and explore options for repairing and mitigating future water damage to reduce risk.

These points are based on general practices and principles in the insurance industry and may vary depending on individual circumstances and specific insurance policies.