my homeowners insurance lapsed: now what?

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Maybe you just sorted through that pile of mail that's been sitting on the table for ages and discover that you received a renewal notice from your home insurer … 3 months ago. You quickly realize you're without home insurance coverage. But at least the lapse wasn't all that long — it shouldn't affect your insurance, right? Think again.

what is a lapse in coverage?

A homeowners insurance lapse occurs when you go without coverage for any period of time — even one day. There are a few common ways it can happen, for example:

  • Your insurance company canceled your policy (for reasons like physical changes to your property, and less frequently, fraud or misrepresentation)
  • You failed to make payments on time (which can lead to suspension or cancellation of coverage)
  • You let your policy expire without securing a new one

Noticing a trend? These situations, for the most part, are entirely preventable. And since a whole host of mishaps can occur when you let your homeowners insurance policy lapse, it's always wise to stay on top of your policy (and that pile of mail) so you can avoid major hardship down the road.

what can happen if i let my homeowners insurance lapse?

There's a reason your agent sent you that renewal notice 3 months ago — it's super important to maintain consistent insurance coverage. Here are a few things that could happen if you don't.

Your rates may go up

Even if your policy lapsed 2 days ago, you may face higher rates when you give your insurer a call to get it started back up. That's because actuaries have found that people who maintain continuous insurance over the years tend to pose less of a financial risk, so letting your coverage lapse — even for a short time — could put you into a higher-risk category when it comes time to determine your new homeowners premium.

Your lender may purchase insurance on your behalf

If you're one of the many Americans who have a mortgage on their home, your lender likely requires continuous homeowners insurance as part of the conditions of your loan.

If your policy lapses for any reason, the mortgage company typically has the right to purchase a policy on the home (typically known as force-placed insurance) and pay for it through your homeowners escrow account — which will, in turn, raise your mortgage payments.

Not only is force-placed insurance almost always much more expensive than a typical homeowners policy, but it often entails lower-quality coverage, too.

You might have trouble getting insured again

If you're getting a new quote, insurers will likely ask about your insurance history, including the length of time you've been continuously insured. If you let your coverage lapse, there's a possibility you'll have a harder time getting a policy (for the same financial-risk reasons mentioned above).

If something happens while you're uninsured, you're out of luck

Say you let your policy expire and haven't secured a new one. Just as luck would have it, lightning hits a tree in your yard, causing it to fall on your roof and cause major damage. Or maybe a thief breaks into your place while you're on vacation and steals some family heirlooms.

If you had homeowners insurance at the time these mishaps occurred, you'd have financial protection to help with repair or replacement costs. But if you didn't have insurance? You guessed it — you're responsible for paying those expenses. (Ouch.)

Even if you secure a home policy right after an incident occurs, home insurers will not cover damage that happened before the policy's start date (also known as "backdating" insurance coverage). All the more reason to keep your coverage current.

If you're an Esurance customer and have questions about policy renewal or anything else, feel free to give us a ring at 1-800-ESURANCE (1-800-378-7262). Our licensed agents can be reached at these times.

Looking to get a new quote for homeowners insurance? Get started here.

5 things that could increase your premium
Coverage lapses aren't the only factors that could cause your homeowners premium to rise.

How your homeowners insurance premium is determined
Learn more about what insurers take into consideration when determining what you'll pay for homeowners insurance.

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