Missing homeowners insurance premium payments may be the result of an
oversight and require a call to your agent to sort out. But the
consequences of missing these payments can be quite serious if it happens
consistently. Finding a policy often involves getting a
free homeowners insurance quote
, choosing the best policy and deciding on a payment plan. It’s helpful to
consider automatic deductions for the payments so you don’t have to
remember to manually make them. If you fail to pay your premiums, here’s
what can happen:
Policy Is Terminated
The most obvious consequence of consistently missing your insurance premium
payments is the eventual
termination of the policy
. After all, if the company isn’t being paid, it can’t very well be
expected to provide coverage. Naturally, if your policy is cancelled, your
home is immediately at risk from any one of a number of pitfalls. Without
homeowners insurance, you’re taking a terrific risk.
If you have a mortgage on your home, your lender
can foreclose on the property
in an effort to protect their investment. If the property isn’t covered and
something happens, the bank will see its investment vaporize. You’ll lose
your home, sure, but they’ll lose their money. Because they have a
fiduciary responsibility, they can allow that to happen, so maintaining
homeowners insurance is often a condition of receiving a loan to purchase a
home. If the insurance lapses, the bank could take the house.
Your Credit Rating Will Suffer
In a lot of ways, an insurance policy is like a loan you pay back in
advance. You agree to pay a set amount each month and the insurance company
agrees to remunerate you for any of a specific set of losses you might
suffer while the policy is in effect. They’re betting you’ll pay more than
you’ll need to take out. If you do need it, the money you’ve paid will help
offset their responsibility to you. If you miss premium payments and your
insurance is cancelled, your credit score will reflect it. This could make
it tougher for you to get any other kind of credit, as well as another
Future Policies Will Be More Costly
A history of missed payments will make premiums on subsequent policies
higher because insurers in most states refer to your
credit-based insurance score
when setting your premium rates. Their concern lies in the fact that many
people who have financial problems tend to turn to filing insurance claims.
The lower your score, the higher the risk insurers consider you, so they’ll
impose higher rates to protect themselves.
As you can see, there are many consequences of missing homeowners insurance
payments—none of which are positive. If you think you’re going to have a
problem making the payment, get in touch with your agent right away and
make arrangements to avoid having your policy cancelled.
Sometimes, getting a free insurance quote can help you find a suitable
policy with lower rates.
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