If you own your home and don’t have a mortgage, there’s no legal requirement to have homeowner’s insurance. While it’s a really bad idea to go without, you could decide to self-fund any damages or losses that occur. However, if you have a mortgage on your home, your financial institution will require you to have homeowner’s insurance. This is true in Huntington Beach, CA or anywhere you get a loan. The lender is using the home’s value as collateral to protect their investment in case of a loss.
You May Be In Default
Depending on the language in your loan documents, if your insurance is canceled and you don’t replace it, or are unable to replace it, you may be in default. That can lead your lender to start foreclosure proceedings and you would be at risk to lose your home if you can’t pay off your mortgage balance.
More likely, however, is that the lender will purchase insurance on your behalf to protect their collateral. This is known as “forced placed insurance.” Let this happen at your own peril, however. The replacement insurance they purchase may be significantly higher – five times as high according to one recent study – and you’ll still be required to pay for it. Lenders have the right to use funds that are in your escrow account, which you will be required to fund, meaning your mortgage rates might go up significantly.
If you are in danger of non-renewal or cancelation, contact Western Republic Insurance Services.
Reasons For Cancelation
There are several reasons your policy may be canceled. Here are the most common:
- Physical changes or damage to your property
- You fail to make timely payments
- You let your policy lapse
In California, insurers are required to give you notice of cancellation at least 20 days before it goes into effect. For non-renewal, insurers need to give you 45 days before the expiration date. When a lapse in coverage happens, your lender will be notified. They are likely to immediately purchase a new policy, which will likely cost you more and have less coverage.
We Can Help
If you have received a cancellation or non-renewal notice, don’t wait. Contact the experts at Western Republic Insurance Services in Huntington Beach, CA for help with your homeowner’s insurance and all of your insurance needs.