As a homeowner, your home insurance policy lapsing can mean bad news for your property. If your home faces damage during this period, your insurance company won’t compensate you. But how can a home insurance policy lapse in the first place? Even small reasons like failing to make a payment on time can cause your provider to drop the policy.
Luckily, handling a lapse in your insurance is relatively simple. All you need to do is pay your late bill and they should reinstate your coverage. However, that doesn’t mean that you should let your homeowners insurance lapse. While you can address the issue fairly easily, it’s risky and may have serious consequences.
We say that because if your policy lapses even for just one day, any damage done during that time won’t be covered. Also, a lapse in coverage will deem you high-risk, resulting in increased premiums. Therefore, learning what can cause a lapse in coverage and how to avoid one is crucial.
What Can Cause a Lapse in Your Home Insurance?
Failing to pay insurance bills on time is the one of the most common reasons for policy lapses. After a certain period of non-payment, the insurance company can cancel the policy. As a result, it creates a lapse in your coverage.
However, there are some other reasons that your insurer cancels your policy.
Leaving Out Important Information on Your Application
If Your Insurer Deems You High-Risk
As mentioned above, having multiple claims or paying insurance bills late can make you a high-risk client for insurance companies. Also, if your area frequently experiences flooding or wildfires, the insurance company may reconsider insuring you.
Neglecting to Maintain Your Home
Failing to keep up with your property’s regular maintenance can cause your insurer to cancel your policy. These issues can include a damaged roof or defective electrical wiring that needs replacing. Even a small repair can lead to policy cancelations.
What Happens When Home Insurance Lapses?
Your Mortgage Lender May Buy a Policy on Your Behalf
When you get a mortgage on a house you make an agreement with the lender to have home insurance. If your policy lapses, your insurer will notify the lender. As a result, your lender may purchase a new policy on the homeowner’s behalf. Often times this policy can be more expensive and may leave your personal belongings unprotected.
Your Insurance Premiums May Increase
Once the policy lapse goes on your record, your insurer will consider you high-risk. Even if you reestablish your home policy, you will still remain a risky client. As a result, your carrier may increase your insurance premiums.
Finding Coverage with Other Carriers Will Become Hard
Failing to meet your home insurance requirements can also lead to problems with finding another reliable carrier. One of the most important questions in the insurance application is concerning your personal records.
In a nutshell, if your insurance lapses, your property is left without coverage. That means you won’t be able to protect your home in the event of a disaster, theft, or fire. Also, you risk an increase in your insurance premiums. Therefore, make sure you pay your bill, maintain your home, and give your insurer all the information they need to avoid this issue from occurring.