Never allow your homeowner’s insurance to lapse unless you have enough money to rebuild your house in the case of a disaster. Unfortunately, your insurance company won’t reimburse you if your home faces major damages during this period. Therefore, keeping your insurance policy in place and paying monthly premiums is essential.
So, what happens if your homeowner lapses?
A lapse in your homeowner insurance coverage means you cannot file claims. As a result, you assume full financial responsibility in the event of a loss. Allowing your homeowners’ policy to lapse exposes you to the possibility of losing money, depending on the value of your belongings.
Insurance covers medical costs for anyone injured on your property due to negligence. Liability coverage refunds your legal fees if the other party sues you. If your insurance lapses, this will lead to a loss of liability coverage for every person that visits your property. You’ll be responsible for all the damages that occurred on your property.
When you get a house mortgage, you agree with the lender to obtain home insurance. If your policy lapses, your insurer will inform the mortgage lender. As a result, your lender may buy a new home insurance policy on your behalf. Often this policy can be more costly and may leave your personal belongings unprotected.
Finding Replacement Coverage Will Be Harder
Failing to meet your insurance requirements can lead to difficulties finding a new carrier. Due to the time without insurance, the insurer views you as a higher risk. In addition, the lapse may give the insurance company an impression of financial insecurity or irresponsibility.