What Happens If You Lose Your Homeowners Insurance?

You can lose your Homeowners Insurance for a number of reasons. Your mortgage or home-loan requirements must be backed by adequate insurance coverage; so this should be a matter of serious concern for you.

The insurance company may cancel your home insurance coverage depending on a variety of reasons, beginning with non-payment of premium to any breach of the terms and conditions of insurance.

For example if you store hazardous chemicals or ny inflammable material in your residential property, the insurance company will immediately cancel your insurance.

However, before this means the end of the world for you, you must immediately take remedial action. You should get replacement coverage at the earliest, to secure your home again against perils.

The mortgage company can also do this but they would club the homeowner’s insurance premium with your monthly mortgage payment.

These kinds of arrangements are called “Lender-placed” or “Force-placed” insurance, because the insurance protects the interest of the lender.

However, this type of insurance turns out to be costlier that what you can yourself buy after evaluating the quotes from several insurance companies. Therefore in case you lose your Homeowners Insurance you must get it before the existing coverage lapses.

If the home loan lender puts the ‘Forced-placed’ insurance then once you get your own insurance, you can request the Lender to terminate the ‘Lender-placed’ insurance. So you will be charged premium only for the period that the coverage was in force. This will help you save some money.