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Homeowners Insurance in Florida

Homeowners insurance in Florida is a type of property insurance that protects a home against damages or losses caused by covered perils. It also safeguards the insured from any financial loss from repairing or replacing their damaged/destroyed personal property such as furniture, clothing, and other personal possessions. Fire, theft, vandalism, hurricanes, and tornadoes are typical examples of perils homeowners insurance covers. Coverage for flooding and earthquake is, however, excluded under homeowners insurance.

The Florida Office of Insurance Regulation (FLOIR) regulates homeowners insurance companies, like other insurers in the state. A standard Florida homeowners insurance policy is a package of coverage comprising six subcategories that cover an insured’s dwelling (and other attached structures), other structures, property liability, additional living expenses (ALE), personal liability, and medical expenses. Although a homeowners policy offers many benefits to an insured in Florida, it is not a statutory requirement for homeowners,except when required by mortgage institutions or banks. Discuss your homeowners insurance questions with a Florida-licensed property insurance agent.

What is Considered Homeowners Insurance?

In Florida, the type of insurance that provides financial compensation to a person whose home or personal belongings are damaged by a peril or pays for personal liability is considered homeowners insurance. Home insurance pays for repairs should an insured’s property be damaged or the cost of rebuilding their home if it was destroyed. It also covers the replacement of the insured’s lost or damaged personal possessions up to the coverage limit. Additional protection for a home’s surrounding structures such as sheds, detached garages, fences, and other structures detached from the main dwelling is also included under a standard Florida home insurance policy.

Homeowners insurance covers living expenses incurred when staying outside your home temporarily because of ongoing repairs or reconstruction. Furthermore, it provides liability coverage and covers medical expenses for treating persons who sustain injuries on your property. It will also pay for the cost of legal defense should you be liable for another person’s damaged property or bodily injury.

Nearly 1/5th of all Property and Casualty insurance premiums in the state of Florida are paid towards homeowners insurance. Florida residents spend more (around 35%) only on insuring vehicles.

HOMEOWNERS INSURANCE in FLORIDA

(at a glance)

Coverage Type % of all P&C in FL
Homeowners Multiple Peril 19%
Federal Flood 1.5%
Private Flood 0.2%

In general, a homeowners insurance policy will vary in terms of the amount of coverage, the coverage type, and a person’s home insurance needs. It is best to discuss your homeowners insurance needs with a credible Florida-licensed property insurance agent. A knowledgeable agent will identify your primary home policy needs and recommend the suitable coverage options for such needs.

What is the Point of Homeowners Insurance Policy?

The primary purpose of a homeowners insurance policy in Florida is to protect a person’s largest investment (their home) and personal assets against burglary, fire, and other covered perils. This is especially true because hurricanes and windstorms frequently target the state and cause widespread residential property damage. For example, the Florida Division of Emergency Management (FDEM) recently provided $2 million worth of relief funding to residents affected by the Southwest Florida tornadoes earlier in January 2022. The National Oceanic and Atmospheric Association (NOAA) has also predicted that a total of 9-16 hurricanes will hit Florida during this 2022 Atlantic Hurricane Season. With homeowners insurance, Florida residents can significantly reduce or completely avoid paying out of their pockets for repairing or rebuilding their homes after a disaster. For example, if lightning strikes your home and causes a fire outbreak, your insurer will pay the cost of repairing the resultant damage or entirely rebuild your home. They will also reimburse you for the cost of replacing any damaged personal possessions up to the coverage limits specified in your policy document. If ongoing home repairs force you to find temporary accommodation, your homeowners insurance will also compensate you for additional expenses incurred for such things as hotel bills and groceries.

Furthermore, having homeowners insurance can facilitate your home financing process. Lending institutions usually require prospective mortgagors to purchase and maintain requisite insurance policies to protect their investments.

What is Homeowners Insurance for?

In Florida, homeowners insurance caters specifically to residential property owners and individuals living in their mortgage-financed or fully-paid homes. It hedges them from exposure to potential financial losses from damage caused by a specified peril such as theft, or weather hazard named in their policy document. This financial protection is subject to the specific coverage type, coverage limits, and exclusions, along with other terms and conditions stipulated in a policy document.

What are the Types of Homeowners Insurance?

The Florida Office of Insurance Regulation (FLOIR) classifies homeowners insurance into six types. These are:

  • Basic Form (HO-1) Insurance: This named-peril plan is the most basic type of homeowners insurance and it solely covers 10 expressly-listed perils. It is the least preferred because of its relatively limited coverage. The 10 perils that a typical HO-1 policy covers are:

    • Fire or smoke

    • Explosions

    • Lightning

    • Hail and windstorms

    • Thefts

    • Vandalism

    • Damage from vehicles

    • Damage from aircraft

    • Riots and commotions

    • Volcanic eruptions

    Note that HO-1 plans generally provide coverage for dwelling and property protection in Florida

  • Broad Form (HO-2) Insurance: Another type of named-peril insurance plan, HO-2 plans or broad form policies similarly cover the same perils as HO-1 plans. They, however, differ from typical HO-1 plans because of the additional coverage included such as:

    • Unforeseen plumbing-related accidents

    • Water/steam discharges or overflows

    • Unexpected man-made electricity-related accidents

    • Frozen domestic AC or heating systems

    • Heavy ice or snow

    • Falling objects

  • Special Form (HO-3) Insurance: Compared to HO-1 and HO-2 insurance plans, special form insurance is an open-peril policy that offers more financial protection. They are especially useful for insuring detached structures such as patios and barns that may be expensive to replace if damaged. Moreso, mortgage banks and other lenders readily prefer them since their investment interests are better protected under this insurance type

  • Comprehensive Form (HO-5) Insurance: Typical HO-5 plans are structured to provide higher coverage limits on specific high-end belongings such as expensive jewelry and rare artifacts. Like HO-3 insurance, they are open-peril insurance policies that are pricier than the former. They are typically purchased for newly-built homes and as such are not common coverage options for most Florida homeowners

  • Older Home Form (HO-8) Insurance: This class of named-peril policies provides coverage from damage for policyholders whose homes are at least 40 years old in Florida. In the event of a covered disaster, these homes require high repair or rebuilding costs which often exceed the home’s value. Also, HO-8 insurance plans generally use a common construction-pricing system (which replaces any damaged item with a rough equivalent of the destroyed material) rather than a replacement cost approach in settling claims

Homeowners insurance policies are also grouped based on the perils covered. A named-peril policy covers listed perils in a policy, while an open-peril policy covers all perils unless expressly excluded in the policy document. However, none of these policies cover earthquakes and floods. Make sure to carefully study the details of your insurance policy document to determine whether an additional rider from your insurer or a separate coverage is required for these perils. You can engage a reputable and licensed local P&C insurance expert to educate and advise you on the best homeowners insurance types suitable for your needs.

Do you Need Homeowners Insurance in Florida?

Although not legally mandated in Florida, a homeowners insurance policy is a necessity for long-term financial protection and mortgage financing. It covers damage or loss to a home and its contents by fire, burglary, and other covered perils. It also protects a mortgage lender’s investment.

Why Do you Need a Homeowners Insurance Policy?

You essentially need a home insurance policy in Florida to compensate you for damage or loss to your home and personal property by fire, theft, hail, or severe weather conditions. It also pays the cost of replacing your lost, stolen, or damaged personal property subject to your coverage limits. A home insurance policy also compensates you for legal defense expenses incurred from liability lawsuits, in addition to helping you offset third-party medical bills and settling the repair/replacement costs of another person’s damaged property for which you are liable.

Even if you have paid off your mortgage, maintaining a home insurance policy ensures that your savings are preserved in the event of unforeseen circumstances.You can speak with a licensed insurance P&C professional in Florida to identify the best homeowners insurance policy for your specific coverage needs.

How Much Homeowners Insurance Do you Need?

In Florida, how much home insurance you need depends on your coverage needs. In general, you require enough homeowners insurance to cover your home repair or rebuilding costs in the event of a covered peril. Although homeowners insurance companies typically offer their customers preset coverage limits, you can still adjust them to accommodate your unique preferences.

Generally, you should ensure that your dwelling coverage limit is sufficient enough to rebuild your home if destroyed by a covered peril. Your home should be insured for an amount equal to or exceeding its replacement cost. Unlike an actual cost coverage, opting for replacement cost coverage ensures that no depreciation (based on the age of the asset) is deducted when your insurer needs to pay out your claim. Moreover, Florida Law requires home insurance companies to provide coverage based on replacement cost except in situations where an insured expressly rejects this offer in writing.

Besides covering the full cost of rebuilding your home, your homeowners policy should also cover the cost of:

  • Repairing/rebuilding other structures detached from the main dwelling unit

  • Repairing/replacing your damaged, lost, or stolen personal property

  • Repairing a third party property damage and settling medical bills for sustained injuries for which you or your property are legally liable

  • Additional expenses incurred when staying somewhere else temporarily if your home is uninhabitable and under repair

While a homeowners insurance policy is generally based on your home’s replacement value or dwelling coverage, other coverages are typically calculated as percentages of the dwelling coverage. For instance, a $300,000 home will have a detached or other structures coverage (assessed at 10% to 20% of the dwelling coverage) that falls between $30,000 to $60,000.

You can only have replacement cost coverage if you have insured your home for up to 80% of its replacement value. It is important to also reject any insurance coverage limit based on your home’s original cost price, existing mortgage, or the valuation of your local tax appraiser. Accepting any of these may result in your home being either overinsured or underinsured. While this may temporarily appeal to you because of the low deductible, you may not be able to rebuild your home in the event of severe damage or destruction. In a bid to protect their investments, mortgage lenders often focus on the minimum amount needed to cover your home. They may ignore your overall coverage needs, resulting in an underinsured home. Consult with a licensed Florida insurance property expert to help you analyze your needs and risks. A knowledgeable agent will determine how much homeowners insurance coverage is required to protect your home from unforeseen circumstances.

What Homeowners Insurance Coverage Do you Need?

Your choice of homeowners insurance coverage in Florida depends on your exact coverage needs, location of the house, and the type of house (structure). You need a coverage type that offers adequate protection for everything you consider valuable against loss or damage. The types of homeowners insurance coverage in Florida include:

  • Coverage A (Dwelling): This pays you for damage or loss to your main structure/dwelling and other attached buildings by fire, theft, vandalism, or natural disasters

  • Coverage B: This provides coverage for your detached buildings and other structures that are detached from the main dwelling such as unattached garages, fences, gazebos, and sheds. In some cases, it may also cover swimming pools and patios, although you may need to buy additional coverage either as riders or separate policies to adequately protect them

  • Coverage C: Your personal property, belongings, furniture, and other fixtures inside the main dwelling are usually protected under this coverage. It also reimburses you for any damage to or loss of personal items caused by named weather hazards, burglars, or vandals

  • Coverage D: Also referred to as loss of use or Additional Living Expenses (ALE) coverage, it pays you, the insured, a pre-specified amount when a covered loss renders your home unlivable. It typically pays out this compensation, capped by the policy limits, for expenses such as hotel bills, groceries, and even loss of income

  • Coverage L: Personal liability coverage as it is also called, pays for liability lawsuits and legal judgments against you for damaging someone else's property or for bodily injury sustained in your home. It also covers the cost of property damage repair or replacement subject to the coverage limits

  • Coverage M: Payments for third-party medical bills are included under this coverage for no-fault bodily injuries sustained by persons (other than you and your family members) on your property or caused by your pets.

Since home insurance is generally a package coverage, you can customize it to meet your specific coverage needs. The size of your budget may also not be a limitation, since most insurance companies can easily accommodate your coverage needs and match them with your budget. However, it is not ideal to under-insure your home. You can engage the services of a knowledgeable P&C insurance agent to help you determine the type of homeowners insurance coverage that best fits your needs.

Is Homeowners Insurance Required by Law in Florida?

No. In Florida, homeowners insurance is not a legal requirement for owning a home. However, you must have a homeowners policy if you need mortgage financing from banks or mortgage lenders.

How Does Homeowners Insurance Work?

Like other residential insurance, homeowners insurance is designed to cover damages and losses to a home. It provides financial compensation to the insured when their home is damaged by a covered event or when their personal belongings are stolen, lost, or vandalized. Homeowners coverage typically covers perils such as fire, hail, windstorms, and lightning, among others.

When a covered peril occurs, the insured submits a claim to the insurance carrier for compensation. The insurance company then sends their adjuster to investigate the claim’s validity and ascertain the scope of the damage or loss. Upon concluding their investigation, the adjuster may recommend a pay-out amount. After reviewing their adjuster’s findings and recommendations, the insurer will either accept, deny, or further investigate the claim. If approved, the insurer will pay the claimant, subject to the claimant’s deductible payment where applicable.

What Does Homeowners Insurance Cover?

In general, homeowners insurance covers damages or losses to your home and its content (personal possessions). In Florida, most homeowners prefer the HO-3 or special form insurance, which typically covers the following perils:

  • Theft

  • Riots

  • Smoke

  • Explosions

  • Fire or lightning

  • Vandalism

  • Frozen pipes

  • Volcanic eruptions

  • Falling objects

  • Hail or windstorms

  • Weight of snow or sleet

  • Accidental tearing, cracking, or burning of water heater

  • Vehicle-related damage

  • Aircraft-related damage

  • Sudden electrical damage

  • Accidental/unexpected AC, plumbing, or heating overflow

Make sure to understand what a homeowners insurance policy covers before purchasing it to avoid unpleasant surprises in the event of a peril. Your best bet to avoid such a situation is to use the services of a knowledgeable Florida-licensed P&C insurance agent to purchase your homeowners policy.

What is Homeowners Insurance Good for?

In Florida, homeowners insurance is good for the protection of your home and its content. It protects your home and personal possessions against damage/loss when a covered event such as theft, fire, and destructive weather conditions occurs. Home insurance can also cover additional financial liabilities resulting from lawsuits and medical expenses if you or your property are liable for damage to another person’s property or bodily injury.

What Does a Typical Homeowners Insurance Include?

Homeowners insurance in Florida typically includes coverage options for perils that can either damage or destroy your entire home and personal possessions. In addition to personal property coverage it may also include coverage for covered losses of another person’s damaged property, their medical bills if they sustain injury on your property, and pay the legal fees incurred in the claim, depending on your policy coverage options.

Who is Covered by a Homeowners Insurance Policy ?

Generally, home insurance in Florida covers you (the homeowner). In addition, your selected coverage options can determine if a third party will be covered under your home insurance policy. For example, a third-party liability claimant is covered under your policy if you purchased a personal liability and medical expenses coverage.

What is Not Covered by Homeowners Insurance?

In general, homeowners insurance cover in Florida does not extend to war-related damage or loss. Also, it does not cover losses resulting from certain natural disasters such as floods and earthquakes.

What Does Homeowners Insurance Typically Exclude?

A standard homeowners insurance policy in Florida excludes coverage for floods. Homeowners looking to protect their homes against floods must purchase a separate flood insurance policy through the National Flood Insurance Program (NFIP), under the auspices of the Federal Emergency Management Agency (FEMA).

Homeowners insurance in Florida also excludes the following:

  • Earthquake

  • Sinkhole

  • Water damage

  • Aggressive dog breeds

  • Poor maintenance-related damage

  • Mold damage

To get coverage for these exclusions, you can purchase standalone policies or add riders/endorsements for extra coverage. To better understand the exclusions in your homeowners policy, speak to a licensed insurance P&C agent in Florida.

What is an Example of Homeowners Insurance?

An example of a standard homeowners coverage in Florida is when a covered peril such as a wildfire consumes an insured’s home and other structures on their property. If the damage is partial, the homeowners insurance will cover the necessary repairs and pay to repair or replace any of their damaged or destroyed possessions minus the deductible. However, if the entire is destroyed, the insurance carrier will reimburse the insured for the loss of their home without any deductions for depreciation if replacement coverage was purchased. They will also be compensated with a pre-agreed dollar amount for the period they stayed in alternative accommodations while their home was being rebuilt.

What is the Most Common Use of Homeowners Insurance in Florida?

The most common use of homeowners insurance in Florida is to protect a home and the personal belongings stored in it against damage or loss caused by a covered peril. Homeowners insurance reimburses an insured for other perils such as:

  • Wind and Hail Damage: In Florida, homeowners insurance companies identify wind and hail as the leading cause of claims requested annually. The state has the highest incidence of thunderstorms in the United States, and property claims related to wind and/or hail storms average around $11,000 per claim

  • Water Damage: Water damage may be caused by rain, leaking/burst pipes, hurricanes, or storm surges. Note, however, that not all water-related damages are compensated for under homeowners insurance. For example, flood damage is excluded under a standard Florida homeowners insurance policy

  • Fire and Lightning Damage: Florida is often referred to as the lightning capital of the U.S., and as such, lightning strikes are commonplace in the state. Most homeowners insurance policies provide coverage for both lightning-related and non-lightning-related fires and usually account for the most expensive claims

  • Break-ins and Thefts: Coverage for this type of peril covers the financial loss resulting from burglary and/or robbery. It also pays for the cost of repairs or replacement for any damaged personal property during break-ins

  • Falling Objects: Home insurance covers damage from fallen trees, electricity poles, or wind-blown debris, and also pays for their removal subject to the coverage limits

  • Liability: This pays for third-party damage/loss and injury claims for which you are liable such as your neighbor being bitten by your dog, slipping on your porch, or ripping their expensive fur coat on your property

  • Other Structures Damage: Protection against covered perils for sheds, detached garages, fences, and barns is included under this coverage

What is the Difference Between Homeowners Insurance and Renters Insurance?

The main difference between homeowners insurance and renters insurance in Florida is the ownership status of a home. Only a homeowner or landlord can purchase a homeowners policy, while a tenant requires a renters insurance policy. Renters insurance primarily protects a tenant’s personal possessions from a covered loss or damage. It also includes liability coverage. Renters insurance does not cover a home’s exterior.

Although both insurance types feature similar insurance coverage areas such as personal property, alternative living expenses (ALE), personal liability, and medical expenses coverage, home insurance has the unique distinction of solely providing dwelling coverage. Homeowners insurance is more expensive than renters insurance because it offers more protection and includes coverage for both the interior and exterior parts of a home.

Do I Need Homeowners Insurance if:

In order to assess your coverage needs and to get a homeowners insurance quote, speak with state-licensed and experienced professionals who are legally able to provide professional insurance advice.

Do I Need Homeowners Insurance if my House is Paid for?

Yes, but your mortgage company should not be the sole reason you must purchase a home insurance policy in Florida. If your home is without homeowners coverage, you will expose it and other structures to damages or losses and may have no choice than to make out-of-pocket payments to cover the costs of any repair or replacement to your home structure.

Do I Need Homeowners Insurance if I Live in a Condo?

No, you don’t. In Florida, condos are covered by a different type of insurance known as condominium unit-owners form (HO-6 insurance or “walls-in” coverage). However, unlike home insurance which covers your entire home, condo insurance coverage is solely limited to the interior of your condo unit. The condo owners association maintains a master insurance policy that protects the exterior of your condo unit and other shared areas of the condominium, such as hallways and lobbies. Nevertheless, condo and homeowners insurance share similar coverage features such as dwelling coverage, personal liability coverage, loss of use coverage, and medical expenses coverage.

Do I Need Homeowners Insurance if I Have PMI?

Yes, you still need a homeowners insurance policy in Florida even if you have a PMI (private mortgage insurance). Lending institutions sometimes impose a PMI as a requirement for issuing loans to borrowers to protect their investments in the event of a default on loan repayments. PMI does not cover your home from unforeseen circumstances, which is why you need homeowners insurance.

Do I Need Homeowners Insurance if I Rent my Home?

Homeowners insurance is for residential properties occupied by the owner. Rental home coverage is achieved through Landlord insurance policy. It provides similar coverage to typical homeowners insurance, but it carries higher risk associated with tenants using the property. As a result, landlords insurance costs more than homeowners.

When Does Homeowners Coverage Begin?

Generally, a standard homeowners coverage in Florida begins after the insurance underwriting process is completed and all other conditions for coverage have been satisfied, including making the first payment. The homeowners insurance underwriting process mainly involves the insurer inspecting the property to be insured and assessing all the potential risks.

Who Can Get Homeowners Insurance in Florida?

Anyone who legally owns a home or can prove legal ownership of a residential property can get homeowners insurance in Florida. A mortgage institution can also get forced-placed homeowners insurance if an insured fails to pay their premium, leading to a policy lapse.

Who Qualifies for Homeowners Insurance Policy?

You qualify for a homeowners insurance policy if you own a home in Florida, regardless of whether you purchased it through a mortgage or not. You may, however, not be eligible for, or may have challenges buying a suitable home insurance policy under the following conditions:

  • When your property is identified as uninhabitable or dangerous to occupy, in an extreme state of disrepair, or requiring considerable repairs

  • When you have a poor credit-based insurance score due to a lapsed insurance coverage or numerous filed claims in the past

  • When your home is located in a high-risk environment such as a flood or earthquake-prone area, a high-crime neighborhood, or an area vulnerable to tornadoes, hurricanes, and other adverse weather conditions

  • When your home has features considered hazardous and increases underwriting risks. Such features include an unfenced swimming pool, a treehouse, overhanging tree branches, trampoline, and an aggressive pet

  • When your home is regularly unoccupied for extended durations

Who Needs Homeowners Insurance?

Every homeowner in Florida needs homeowners insurance, considering the state’s tropical climate which is prone to hurricanes and storms. Homeowners insurance covers a home from the damage or destruction that results from these adverse weather events. It also provides coverage against theft, vandalism, and fire and pays for third-party liability claims in the event of property damage or bodily injury that occurs on an insured property.

Who Should Get Homeowners Insurance?

You should purchase homeowners insurance if you own a home. While Florida law does not legally mandate you to do so, your mortgage lender will insist that you get home insurance coverage as one of their lending requirements.

However, you should discuss your options with an experienced Florida-licensed property insurance agent to identify the best plans that match your budget and coverage needs.

PROs and CONs of Homeowners Insurance in Florida

Homeowners insurance has its pros and cons in Florida

PROs of Homeowners Insurance

  • Provides Extensive Coverage: Homeowners policies generally provide significant coverage for damages or losses caused by a wide range of perils such as theft, fire, and windstorms

  • Peace of Mind: Homeowners insurance affords insureds, especially seniors and retirees, a considerable measure of calmness regarding sudden expenses that may arise from damage or loss by covered natural disasters. They are assured, to a large extent, that such expenses will not erode their savings or diminish their living standards

  • Liability protection: With a homeowners policy, an insured is safeguarded from lawsuit-related expenses, such as attorney fees and court costs that emanate from property damage or accidental injuries on their property. It also covers the costs of providing treatment to an injured party regardless of the at-fault party subject to the policy coverage limits.

CONs of Homeowners Insurance

  • Expensive Coverage: Homeowners in Florida may sometimes be faced with high monthly premiums based on the type of home and the amount of coverage required to cover repairs or rebuilding. Florida law mandates insurers to provide homeowners coverage on the basis of replacement cost, and this is usually expensive

  • Terms and Conditions: Homeowners insurance companies often use some legal terms and clauses in their policy contracts. An insured may not clearly understand some of these terms unless they are interpreted by a licensed P&C insurance agent

  • Not Often Comprehensive: Homeowners insurance is often not as encompassing as expected. Even open-peril policies will still have certain exclusions. For example, insureds must either buy a separate policy or add a rider to cover flood damage or other excluded perils such as earthquakes and wars

Is Homeowners Insurance Worth Buying?

Homeowners insurance is worth buying in Florida because it can help you save money that would otherwise have been expended on the repairs or rebuilding of your home and other covered assets. It also accelerates the process of securing a mortgage loan.

What Happens if you Don’t Have Homeowners Insurance in Florida?

The most severe consequence you may face for not having homeowners insurance in Florida is the risk of losing your home in the event of an insurable peril. If such happenst, you will have to rebuild your home using out-of-pocket funds. This is particularly difficult or least likely to be achieved if you are retired, an elderly, or do not have the financial means to rebuild your home.

In addition, you will bear the cost of repairs for any damage to your personal property using your savings. Doing this may further strain your financial resources and force you to settle for inadequate or substandard furniture and other personal belongings.

Furthermore, you will be personally responsible for covering your legal defense costs if a claim for a third-party injury or property damage is filed against you.

Why is Homeowners Insurance Important?

In Florida, homeowners insurance serves the primary function of protecting most homeowners’ largest investments-their homes, therefore, guaranteeing their peace of mind if covered perils or other unforeseen weather disasters occur.

What Happens When your Homeowners Insurance Lapses?

Your homeowners insurance policy typically lapses when you miss one or more premium payments and fail to pay within the grace period offered by your insurer. When this happens, it leaves your home vulnerable and exposes you to varying degrees of financial losses in the event of an insurable peril.

If you have a mortgage and fail to reinstate coverage after a policy lapse, your mortgage lender can secure a pricier force-placed insurance policy on your behalf with limited coverage that only protects their investment interest. Having a lapsed policy also affects your insurance score negatively and may result in higher premiums when you apply for insurance coverage in the future.