Washington D.C.

Continuous Coverage Of Your Home Is More Important Than Ever

The economy is troubled. Unemployment is a big problem. Foreclosures are mounting. Families continue to experience turmoil as members move out, back in or just move away.

Faced with all of these stress builders, some folks believe they no longer need a homeowners or a renters policy. In fact, the reverse is true. Continuous coverage is more important now than ever. Letting the policy lapse can have major consequences.

First, there are the normal risks of having a loss when coverage is not in place. Insurance is a protection against the unknown. As the economy struggles, crime rates increase.

How would you feel if you had no coverage when someone broke into your home and stole your jewelry and television?

If your neighbor slipped and broke a hip while visiting, who is going to help when you get sued for the damages?

These are a couple of examples of the many reasons for having insurance coverage in place, but there are also reasons to maintain continuous coverage.

For most states, a policyholder who has not had coverage for more than 30 days must meet our new business eligibility guidelines.

Even if a policyholder meets eligibility guidelines, some policy discounts may be forfeited. For example, an insured that had a homeowner’s policy for more than 10 years who let the policy lapse because they were moving into a new home is affected. A new policy is written, but the catastrophe wind loss the customer had in 2006 kept them from getting any credit for prior years. Discounts vary, but the amounts can be as high as 20 percent.

Don’t forget any applicable multi-line discount could be lost on all auto policies if there is no homeowners or renters policy in force.

Here are some recent examples of reasons that have led to policies going out of force:

• A customer moved in with relatives after a home foreclosure
• A customer moved to a new home
• A customer had a new home built
• A customer moved to a new state
• A customer forgot to pay the bill and wanted to reinstate the policy two months later

In all of these cases, the policyholder was either told they were no longer eligible or they were no longer going to get the same discounts they had before. In these cases, there were two factors at work: first, there was claim activity within the last five years, and secondly, coverage was out of force for more than 30 days. Simply working the beginning of day report for lapses and cancellations could have prevented many of these cases from even being an issue. In addition, if we know a policyholder is moving out of state, we should always recommend they find an agent in their new location before letting their policy go out of force.

In these uncertain times, not maintaining continuous insurance coverage is a huge gamble. Why take chances with eligibility and pricing issues? Keeping coverage in place can make dollars and cents.