What Happens if You Don’t Have Homeowners Insurance

What Happens if You Don't Have Homeowners Insurance

Most homeowners agree that homeowners insurance is essential. At least, this is the case if you want to protect your major investment in your home.

However, there are times when you may find yourself without home insurance protection. What happens then? Here’s what you need to know so you can get the protection you need for your home and remain in the good graces of your mortgage company.

How Can I Get Homeowners Insurance After Non-Renewal?

It’s not fun to feel rejected — especially by your insurance company. Regardless of the reason for your non-renewal, it is important to get back out there and look for companies that are willing to work with you.  Look for an insurance company that will offer you the coverage you need to protect your home, family, and financial interests. 

There are plenty of homeowners insurance providers who are willing to work with individuals who have filed claims in the past and even those who have been rejected or dropped from other providers. That means you have options available to you.

Unfortunately, you need to act swiftly. Many providers do not provide a great deal of notice before dropping your coverage or simply declining to renew your insurance coverage.

How to Get Homeowners Insurance After Being Dropped?

The best way to get homeowners insurance after being dropped from your provider is to shop around for another insurance provider willing to work with you. Insurance Center of North Jersey is an independent insurance agency. As such, we work with multiple providers. This means we can often find an insurer willing to work with you even if another insurance provider has dropped you.

We will work with you to understand why your initial insurance provider decided to drop your coverage.  We can suggest items you can do to reduce your insurance costs and help you find the right insurance coverage to meet your personal needs.

What Happens if Your House Burns Down and You Have No Insurance? 

People who have been dropped from their homeowners insurance policy often wonder what happens if your house burns down and you have no insurance? The short answer is: you lose your home and the possessions inside.

However, that isn’t the extent of it. Depending on local laws, you may be responsible for removing your home’s damaged remains as well. And, you’ll likely have to bear the cost of rebuilding your home if you have no homeowners insurance. 

The other thing to consider is that you must pay to replace your possessions and find another place to live.

Suppose you still have a mortgage on your home. In that case, you must continue paying the mortgage on your home while also finding alternative living arrangements.

If the fire damaged an adjacent property to your home, you could also find yourself facing legal fees and damages to your neighbors for damage to their properties. These are all things your home insurance policy would typically cover.

It is a massive financial burden to carry, but one that can be prevented with adequate home insurance coverage. You need to have one thought after insurance non-renewal: How to get homeowners insurance.

The good news is that there are other policies available.

Can You Have a Mortgage Without Homeowners Insurance?

It is almost unheard of for a mortgage company to allow you to continue your mortgage without having proper homeowners insurance coverage. In fact, many insurance companies require insurance payments and property taxes to be held in escrow to ensure that these payments are made on time from one month to the next.

The long and short of it is this: Because failing to have insurance violates your mortgage contract, you are in default of your contract terms and can be declared in default if you do not correct the problem immediately. That can lead to foreclosure, which means you can lose your home, and any equity you have in your home simply by not having insurance.

Some mortgage companies will find new insurance coverage for you and wrap it into your escrow payments. This is called forced placed coverage.  When this happens, it eliminates your choice in purchasing insurance and most likely doesn’t protect your personal property. It’s quite expensive, and coverage is very limited.

The bank will choose insurance that represents its interests and not yours. Even worse, this new, more limited coverage may even be more expensive without offering you any personal property protection.

It is much better to remedy the situation on your terms rather than allowing your mortgage provider the opportunity to do so.

Is it Illegal Not to Have Home Insurance?

In most U.S. states, there is no law requiring homeowners to purchase home insurance if they own their home outright.

However, your contract with your mortgage company is legally binding. This is unlike car insurance, whereby drivers are required to have automobile insurance. But, if you do have a mortgage, you are typically required to carry homeowners insurance in an amount sufficient to cover the bank’s investment in your home.

If you own your home free-and-clear and think about skipping homeowners insurance to save money, it can be costly and not a very good idea.

Homeowners insurance is one of the most important purchases you can make to protect your financial interests. It offers protection for your home, attached dwellings (such as a deck), and your personal property within the home. It also provides liability protection if someone is injured or suffers property loss while on by your property. 

We live in a litigious society. The liability protection afforded you by your homeowner’s insurance policy is just as crucial for protecting your financial risks as the insurance that covers the property itself from covered events such as fires, windstorms, vandalism, and theft.

Secure Homeowners Insurance at The Insurance Center of North Jersey

The Insurance Center of North Jersey has been serving the home and business insurance needs of area residents since 1927. See for yourself how we’re different from all the others. 

If you’ve been dropped by your home insurance provider or even if you’re interested in exploring your insurance options, the Insurance Center of North Jersey is here to help.

Contact us today by calling 201-525-1100 and let us help you get the protection for your home and the financial interests you need and deserve.