Insurance providers require every home insurance policyholder to abide by the terms and conditions of the insurance contract during the policy term. Failure to do so typically leads to repercussions such as policy cancellation, lapse, or non-renewal. Here’s more detailed information on this topic.
What Cancellation, Non-Renewal, and Lapse Mean in Home Insurance
While policy cancellation and non-renewal both result in the loss of coverage, the two scenarios happen for different reasons. Policy cancellation is a situation in which the insurance provider drops you within 60 days of policy inception. Cancellation can also happen after 60 days if you fail to pay home insurance premiums or breach the policy terms. On the other hand, non-renewal usually occurs just before a policy lapses. Take note that, unlike cancellation, non-renewal does not emanate from things such as insurance fraud, failure to pay premiums, or breach of policy terms. Instead, the insurer can refuse to renew your policy if:
- They can no longer offer your preferred coverage
- You become too high-risk
- You file too many claims
In case of policy non-renewal, the insurer is supposed to inform the policyholder anywhere from 30 days to 60 days prior. Remember, the policyholder can also willingly choose not to renew their homeowners insurance policy and switch to another provider.
Homeowners Insurance After a Lapse
Insurance providers require policyholders to pay monthly premiums on their home insurance policies. Skipping payments can result in a lapse, leaving you uninsured. Therefore, if a disaster strikes after a lapse, you cannot file a home insurance claim. Additionally, if a lapse occurs when you have a mortgage loan, the lender will get alternate coverage on your behalf, albeit at a higher cost. It’s worth noting that if you miss one payment, the insurer will allow you 30 days to complete the payment before terminating your insurance contract. If, in any case, your policy lapses, try to reinstate it during the 30-day grace period. This will not only allow you to retain your coverage but also makes it easier for you to get coverage in the future.
Homeowners Insurance After Cancellation or Non-Renewal
In 2019, insurers in California declined to renew more than 235,000 home insurance policies due to increased wildfire risk. Getting dropped for reasons other than increased risk or too many claims won’t affect your ability to get coverage in the future. However, if the insurer cancels your policy or refuses to renew it for one reason or another, it may be difficult for you to get alternative coverage. However, remaining uninsured is not a viable option, especially if you live in a disaster-prone area. Therefore, in case of a cancellation or non-renewal, you should make every effort to get coverage. To this end, we at the Burton A. Harris Insurance Agency can obtain quotes from different carriers. This will increase your chances of getting a policy that suits your needs and budget. Additionally, you can use various strategies to lower your insurance costs. These include raising your deductible, bundling with auto insurance, and mitigating risks. If no private insurer is willing to insure you because of your cancellation history, we have direct access to the federal government’s FAIR plan.
How Burton A. Harris Insurance Agency Can Help
Homeowners insurance cancellation, non-renewal, or lapse should not deter you from seeking alternative coverage. Take the time to go over basic homeowners insurance facts by contacting our experts at Burton A. Harris Insurance Agency and schedule a policy review. Our agents can assist you in upgrading your policy or making any changes that may be necessary.