Why It’s Important to Pay Your Insurance Premiums on Time

It may not seem important but forgetting to make an auto or home insurance payment or having a lapse in coverage can have serious repercussions.

Let’s say you don’t drive that much anymore, so you miss an insurance payment or two, but then you get into an accident… If your premium goes unpaid, your insurance policy is void. Meaning, your insurance company is not obligated to rewrite your policy. You’ll be left without coverage and will likely have a higher rate when you do find a new carrier because the lapse has now left you labeled as “high risk.”
Your cancel notice gives you the date that payment must be received by, and if that date occurs with no payment, the system will automatically cancel your policy. Once you’re canceled, your carrier will not take you back unless they are required by law.

Let’s dive further into more facts and answer some questions every vehicle or homeowner should know about their coverage.

Home Insurance Is Required If You Have A Mortgage

While home insurance isn’t required by law, your lender will require you to be insured if you have a mortgage. Your policy will need to cover wind, hail, fire and vandalism. The lender will be named as an additional insured. Should you file a claim for damage or loss, the insurance company will issue a two-party check naming you as the insured along with the mortgage company.

If you fail to pay your home insurance, you could have a lapse in coverage. Your policy will cancel, which is a violation of your mortgage agreement, and there will be no coverage in the event of a loss or claim. Also, the homeowner’s insurance is a package, which covers the home, other structures, your personal property, additional living expenses, and provides personal liability. You will lose all of that if the policy cancels.

Car Insurance Is Required By Law

In every state except New Hampshire, you’re required to have car insurance. You have to have minimum coverage in case you get in an accident, though what you are required to carry does vary by state.
When you register your car, you submit proof of insurance. When you buy a car, you can’t leave the lot without signing up for insurance. It’s just along the way that you might accidentally, or on purpose, miss a payment and cause your insurance to lapse.

What Is A lapse?

You pay for a specific time period on your insurance. It may be six months, a year or other timeframe. In all cases, you will have a start date and end date. As long as you are paying the bills on time, all is well.

Featured in the May 2023 issue of PORAC Law Enforcement News.