A homeowner’s insurance lapse can happen even to the best policyholders. An oversight or failed automatic payments can cause a lapse in your coverage due to nonpayment. Though your coverage should be reinstated once you pay your past-due insurance bill, it isn’t always that simple.
If your homeowner’s insurance policy lapses even for just a day or two, any damages that may occur to your home during that time, due to a fire, storm, or burglary/vandalism could leave you without coverage to pay for the damage.
So, you let your homeowner’s insurance lapse. What happens next? Our public adjusters explain.
What is a Homeowner’s Insurance Lapse?
If you do not pay your homeowner’s insurance bill, your coverage will be canceled, creating a lapse in coverage. But since most people pay their homeowner’s insurance with their mortgage payment, how does a lapse happen?
Besides nonpayment, your homeowner’s insurance could lapse because:
You misrepresented yourself on your application. Perhaps you don’t live in your home full time, or you don’t have the security features you claimed to have. If your insurer finds out, they may cancel your policy.
You are high-risk. If you have made too many claims, live in a fire or flood zone, or have paid your premiums late multiple times, you may be deemed too high of a risk to insure.
You aren’t maintaining your property. If your roof needs to be replaced but you have avoided it, or if your initial home inspection found problems that you have yet to take care of, your insurer may cancel your coverage.
Typically, you will receive a warning letter for non-payment, and you will likely have a 30-day grace period to reinstate your policy and avoid a lapse in coverage. If this happens, act fast and reinstate your policy ASAP!
Learn More > How to Avoid Non-Renewal of Your Homeowner’s Insurance
What Happens if There is a Lapse in Homeowner’s Coverage?
Since your property is likely your biggest asset, it is important to avoid lapses in your homeowner’s insurance coverage. It can be quite costly to fix damage after a natural disaster or fire, and without insurance, you would have to pay for the repairs with your own funds.
Homeowner’s insurance protects your investment and alleviates some of the financial burdens if you must place a claim for damage.
If another insurer discovers your previous gap in coverage or learns that a provider dropped your coverage due to you being “high-risk,” it can be harder for you to get coverage in the future, and your premiums may go up
If you still have a mortgage, you are required to carry homeowner’s insurance. So, if your insurance lapses and you don’t reinstate your policy or get a new one, your mortgage lender will purchase insurance on your behalf. Keep in mind, this can be more expensive than your previous policy and your mortgage payment will increase to compensate for this added expense.
What Can You Do if Coverage Has Lapsed?
If your homeowner’s insurance policy has lapsed due to unpaid premiums, call your insurer to see about reinstating your policy—especially if the unpaid premiums were due to an autopay or clerical error.
Sometimes, your insurer will reinstate your policy if you pay your past-due premiums within a certain period.
Just remember: After a coverage lapse, the sooner you act the better.
Reinstatement
If you agree to pay your past premiums or take the proper steps to minimize your risk, your insurance providers may offer to reinstate your policy. But if they won’t reinstate your policy, you’ll need to look elsewhere. You might need to investigate high-risk insurance options. Any insurance is better than nothing.
Tips for Managing Your Homeowner’s Insurance Coverage
Here are a few tips to help avoid a lapse in coverage and keep your policy in good standing:
Only file a claim when it is necessary. Filing too many claims can cause your insurer to drop your coverage. For minor damages, consider the feasibility of paying for repairs out of pocket. Don’t do yourself more harm than good, it costs nothing to speak with a licensed claim professional (plus, we’ll manage any claims from start to finish likely getting you a larger settlement.)
Document your property. To avoid cancelation upon inspection, take videos and photos of your property to document the condition of your property at the time of application.
Maintain your property. Maintaining your home and property over the years can reduce the likelihood of your policy being canceled due to non-maintenance.
Never ignore a cancellation letter. Contact your insurer to see how to keep your policy current if you address their concerns.
Don’t allow your mortgage company to purchase your insurance. If your mortgage lender purchases insurance for you, you will likely have limited coverage. Though more expensive, they usually only cover the structure, not your personal property.
Don’t let your policy lapse. Do whatever you can to ensure that you meet your insurer’s standards and pay your premiums on time. Even a lapse of a single day could cause higher insurance rates.
Get Justice for Your Homeowner’s Insurance Claim
While it is important to not allow your homeowner’s insurance to lapse, it is equally important to hire a public adjuster when you need to place a homeowner’s insurance claim for damages to your home. Lean on us, we will work directly with your insurer to get justice for your claim and help prevent cancellations due to “high risk.”
If you need to reopen a denied claim or get a damage claim started, reach out to our public adjusters at Liberty Insurance Adjusters today; 813-922-5129. We are on your side, always.