What Happens If You Can’t Afford Your Home Insurance Payment?

The coronavirus (COVID-19) lock-down has caused many homeowners to reevaluate where their money is going and to look for ways to cut unnecessary costs. Even though making your homeowner’s insurance payment may not feel like a priority when there is a long list of pressing budget concerns, canceling or defaulting on your property insurance can leave you open to major financial trouble should you be sued or your home or your property becomes damaged.

Prior to the coronavirus pandemic, a missed insurance payment would usually spur a reminder sent out a few days after the due date. If you paid late, but within the standard 30-day grace period, you’d likely be hit with a late fee, but you wouldn’t see any lapse in your coverage. That said, missing a payment could still cause insurance premiums to rise. Missing more than one could even result in a loss of coverage, and a bill may even be sent to a collections agency.

Recognizing the unique circumstances surrounding COVID-19, insurance companies across the country are being urged by state insurance departments to lighten up on penalties for late payments, offer flexible payment plans, hold off on cancellations for nonpayment, and extend their grace periods for missed payments.

• Pennsylvania: Among other concessions, Pennsylvania is urging insurers to extend their grace period for missed or late payments. The Insurance Commissioner, Jessica Altman, is instructing insurers to only cancel or non-renew policies when they’ve tried extensively and failed to work with the policyholders.
• North Dakota: The Insurance Department of North Dakota Commissioner, Jon Godfread, issued guidance for insurers to provide relief to policyholders by extending premium payment deadlines and extending premium payment grace periods.
• Indiana: The Indiana Department of Insurance issued a moratorium on policy cancellations and non-renewals for policyholders statewide. This moratorium allows a grace period of 60-days for missed premium payments.

While these efforts will buy you more time to pay your insurance, it is not a forgiveness program and all late or missed payments will eventually need to be paid in full. To find out if your insurer is offering similar relief, contact your insurance company or your state insurance department.

The short answer is, not too much. You can still file claims during the coronavirus. In typical times filing a claim would mean an adjuster would come to your home to document the damage. However, due to social distancing protocols, your insurer may rely more heavily on photos and videos to support your claim.

If you’ve recently moved your business to your home, you may want to consider expanding your coverage to include a home business coverage endorsement. This additional coverage will protect any business equipment you have in your home.

The process of obtaining homeowners insurance for first-time homebuyers has changed very little in response to the pandemic. Lenders are still requiring homeowners insurance and, in typical times, a first-time homebuyer would begin shopping around from insurance at least 30 days before closing. You would get a quote, decide on the amount you want to be insured (it’s advisable to insure your home for what it would cost to rebuild it), and pull the trigger. This process remains unchanged.

However, first-time homebuyers are being offered the same payment solutions as current policyholders. Meaning extended grace periods and payment plans should be an option if you’re unable to pay your premium. You should be upfront with your insurance company if you anticipate you won’t be able to keep up with payments on time and ask what relief they are offering during the coronavirus.

Don’t let your insurance lapse because you’re short on funds. Reach out to your insurer early to see what kind of payment solutions are being offered in your state.