Although you had the best of intentions to renew, you have discovered that your home insurance policy has lapsed. Even worse–you discovered the insurance lapse after suffering a loss or damage that you have submitted a claim for. Despite the insurance company denying the claim, you are not necessarily responsible for the bill yourself.
How Insurance Lapses Occur
A Hollywood insurance policy is typically issued for a set period of time, determined by you and the insurer. At the end of the time period, the parties are typically able to renew the coverage. However, the insured typically has to “opt in” and the insurer has the right to revise coverage terms and/or pricing. Essentially, at the end of the time period, there is a new contract.
Although an insurer will send a notification that the policy will be ending without renewal, sometimes the insured misses the communication. Or, if the insured is paying the policy automatically, they may inadvertently cancel the credit card that the payment is drawing from. These are common reasons why a home insurance policy would lapse.
What To Do When Insurance Lapses Occur
Fortunately, there are a few things that you can do if your Hollywood insurance policy has lapsed.
See if Payments Were Made
First, a Hollywood insurance policyholder should see if payments were still made. An insurer may say that you stopped making payments. But it is possible that a payment was made but the insurer has no record of it due to a computer or clerical error.
Check bank accounts and see if the payment drew. It is fairly simple to search the records of most checking accounts online, but you can also contact your bank for assistance with this.
Investigate Grace Periods
Upon looking at your bank records, you may determine that you actually did not make the payment. Still, you may be okay because many insurance policies have grace periods. A grace period is a set amount of time when an insured can have a late payment but still have coverage. Those grace periods are laid out in the contract between the insured and the insurer.
Grace periods differ depending on the contract, but they can be as long as a few months from the missed payment. That means that if your last on-time payment was May 1 and you had a grace period of three months, but you missed the June 1 payment and got into a car accident on June 5, you would still be covered during the grace period.
However, if you did not make any payments and got into a car accident on December 1, you would be out of luck, as the policy then would be lapsed. Whenever that grace period is over, if there are no payments, the policy will be determined to have lapsed on the day of the first missed payment.
Determine Whether Proper Notice of the Lapse Was Given
Finally, you may also investigate whether the insurer gave proper notice of the lapse. Typically, the insurer must give proper notice that a Hollywood insurance policy is about to lapse. The insurer must mail a notice to your address.
If you can show that the notice was not mailed, mailed to an incorrect address (that was not a result of you not updating your information), or acted in bad faith in general, you may not be responsible for the lapse.