Home insurance is one of the most valuable investments you can make. Yet, it may not seem as valuable when you are making payments on it, and perhaps even struggling to do so. In some cases, you may simply forget to make the payment. Whenever this occurs, you may mistakenly let the policy lapse. What happens when that occurs?
Realize the Value of Home Insurance
Before allowing the policy to lapse, realize what it means to not have coverage. Home insurance is valuable because it protects your house and assets from many risks, such as:
- Fire destroying the entire building
- Property lost due to flooding from a broken water heater or burst pipes
- Coverage for the lost diamond in a wedding ring
- Protection if someone slips and falls on your property
- Protection from theft
More so, your mortgage lender may take legal action against you if and when your coverage lapses. This is due to their requirement for borrowers to maintain comprehensive coverage on their plans. You may face fines or other restrictions from your lender if you allow the policy to lapse.
What Happens if it Does?
Let's say that your policy does expire and you do not renew it. If that happens, your insurance provider legally needs to notify your mortgage lender of the lack of coverage. If it does not lead to your reinstatement of insurance, then the mortgage lender could force-place insurance on the property. This type of insurance, which you will be required to pay for through your mortgage payment, will only cover the structure. It may not cover the actual contents of your home (such as your belongings) and it may not provide liability protection. You may also be labeled as a high-risk borrower. This may mean that insurance for you will be more expensive in the future.
If you are struggling to make a payment on your existing policy, call your insurance carrier. It may also be beneficial to search for new home insurance policies that may offer better affordability. You may qualify for new discounts or may not need as much coverage as you currently have.
Are you covered? Call Ten Eyck Group at (518) 464-0059 for more information on Albany home insurance.