For homeowners, maintaining continuous insurance coverage is essential to protect your investment and financial stability. A lapse in your homeowner’s insurance policy—whether intentional or accidental—can have serious consequences.
Understanding what a policy lapse is, how it can occur, and what it means for your ability to recover in the event of a loss is critical. If you’ve experienced a policy lapse or are currently in a dispute with your insurer, seeking legal advice can make a difference in how your case is resolved.
What Is a Policy Lapse?
A policy lapse occurs when your homeowner’s insurance policy is terminated due to nonpayment of premiums or failure to meet other policy requirements. Once a lapse occurs, your insurance company is no longer obligated to cover any losses that take place after the coverage period ends. Even a brief lapse in coverage can leave you exposed.
Common Causes of Policy Lapses
Policy lapses can happen for a number of reasons, including:
- Missed payments: If you forget to pay your premium or automatic payments fail, your policy may be canceled.
- Miscommunications with escrow accounts: Homeowners who pay insurance through their mortgage escrow accounts may assume payments are being made, only to find out they weren’t.
- Non-renewal issues: If an insurance company chooses not to renew your policy, and you don’t secure a new one in time, you may face a coverage gap.
- Failure to meet underwriting conditions: Making unapproved changes to your property or failing to address known risks may also lead to a lapse.
Consequences of a Policy Lapse
A lapse in coverage can create a domino effect of problems:
- Uncovered losses: If your policy is inactive at the time of a fire, theft, or natural disaster, you could be left paying for the full cost of repairs or replacements out of pocket.
- Higher premiums in the future: Insurance companies often consider a lapse in coverage a red flag, which can lead to higher premiums or difficulty obtaining new coverage.
- Mortgage complications: Most mortgage agreements require continuous insurance. A lapse may result in your lender force-placing a policy on your behalf—typically at a much higher cost and with limited protection.
What to Do If You’ve Had a Lapse
If you discover your policy has lapsed, act quickly:
- Contact your insurance provider immediately to discuss your options for reinstatement or new coverage.
- Secure new coverage as soon as possible to prevent any further gap.
- Review your mortgage agreement to ensure you are meeting lender requirements.
- Document everything, especially any communication with your insurer.
When to Contact an Insurance Dispute Attorney
In some cases, homeowners may believe they were covered at the time of a loss, only to learn their policy had lapsed without clear notice. If you’re facing a denied claim due to a lapse, or you believe your insurance company didn’t follow proper procedures, an attorney experienced in insurance disputes can help.
Our firm helps homeowners protect their rights and recover what they’re owed. If you’re in a dispute over a policy lapse or denied claim, contact us for a consultation.
