Insurance is necessary to protect your home, auto, business, and other important assets. However, there are times when you may have an insurance policy lapse for reasons such as nonpayment or noncompliance with certain provisions. Here’s what happens when you get that dreaded notice that your policy has lapsed.
You Have No Coverage
The most immediate concern is that you may be without coverage until you are able remedy the situation. Call your insurance agent or customer service line to see what you need to do to have coverage reinstated. It may be as simple as returning a renewal questionnaire, or it could be that your last payment was never credited.
You May Be Forced Into Lender Placed Coverage
Your lienholder may automatically issue a lender placed insurance policy once the lender is aware of the apparent insurance lapse. However, the premium costs are usually significantly higher than coverage on the open market, so you’ll want to get your original policy reinstated as soon as possible.
You Will Pay More Premium
Your policy may be surcharged depending on the length of time and reason for the lapse, so don’t just wait for it to sort itself out. Proactively reach out to your insurer and pay any premium in arrears right away.
Policy lapses are a headache and a threat to your financial future, so make sure you sort it out right away.