What Happens If You Skip Home Insurance After Closing?

You’ve signed the paperwork, gotten the keys, and moved in. It might feel like your job as a homeowner is done but if you haven’t activated your home insurance or let it lapse after closing, you’re playing a risky game.

Home insurance isn’t just something lenders ask for to check a box. It protects your most valuable asset. Letting your policy lapse even unintentionally can leave you financially and legally exposed.

Here’s what actually happens if you skip home insurance after closing, and why it’s a mistake that could cost you thousands.

You Could Be Hit With Lender “Force-Placed” Insurance

If you financed your home with a mortgage, your lender requires you to maintain homeowners insurance throughout the life of the loan. If they find out you’ve let your policy lapse or never activated it after closing, they won’t just send a warning they’ll act.

Force-placed insurance (also known as lender-placed insurance) is what the bank buys on your behalf when you don’t carry your own policy.

Why force-placed insurance is a problem:

It’s significantly more expensive than standard insurance
It only protects the lender, not your personal property or liability
You have no control over the provider or coverage limits
It’s added directly to your monthly mortgage payment or escrow balance

According to the Consumer Financial Protection Bureau (CFPB), force-placed policies can cost 2–10 times more than a regular home insurance plan.

And once it’s in place, removing it requires proving you’ve secured valid insurance plus paying any overdue balances.

You’re Financially Exposed to Disasters

Home insurance protects you against events that can quickly devastate your finances like fires, storms, theft, and plumbing disasters. Without it, you’re responsible for 100% of the repair and replacement costs out of pocket.

Imagine this:

You buy a home for $350,000, but two months after moving in, a kitchen fire causes $80,000 in damage. If you never activated your policy, that full cost falls on you. No insurance payout. No help.

Even worse, if a guest gets injured on your property and sues you for medical costs, pain and suffering, or lost wages, you could be on the hook for tens or hundreds of thousands of dollars without liability coverage.

Liability Risks Become Yours Alone

A standard home insurance policy includes personal liability protection coverage for injuries, property damage, or legal claims against you as a homeowner.

If someone trips on your porch steps, gets bitten by your dog, or slips by your pool and breaks a leg, you could be sued. Without coverage, those legal and medical costs come out of your own savings or assets.

A single lawsuit can destroy your financial stability especially if you’re found liable and don’t have coverage in place.

Mortgage Defaults and Foreclosure Risks

Skipping home insurance doesn’t just open you up to personal risk it can also violate your mortgage agreement.

Lenders usually consider home insurance part of your loan terms, and defaulting on this requirement can trigger:

Higher escrow payments
Loan penalties or fees
Legal action from your lender
Foreclosure in extreme cases, especially if you refuse to pay force-placed premiums

Even if your home is paid off and you don’t have a lender to answer to, a disaster without coverage could still force you to sell or lose the home.

Why Some Homeowners Accidentally Skip Insurance

Skipping home insurance after closing isn’t always intentional. It often happens because:

The policy wasn’t activated properly before closing
The homeowner misunderstood the coverage start date
Payment failed and the policy lapsed after a few months
A canceled escrow account wasn’t updated with new billing info

Whatever the reason, it’s critical to stay on top of your policy and ensure it’s active, paid, and compliant with your lender’s requirements.

How to Fix a Lapsed Policy Quickly

If you’ve skipped or lost home insurance after closing, act fast to limit the damage.

Here’s what to do:

Call your original insurer and ask if the policy can be reinstated
Shop for a new policy immediately (start with a 1-year term to satisfy your lender)
Send proof of insurance to your mortgage servicer ASAP
Check your escrow balance—force-placed insurance may already be billed
Negotiate removal of force-placed coverage once your new policy is active

Final Thoughts: Skipping Home Insurance Isn’t Worth the Risk

Whether you’re a new homeowner or refinancing, keeping your home insured is non-negotiable. Even one lapse in coverage can lead to force-placed insurance, legal liability, or catastrophic financial loss.

Don’t wait for something to go wrong. The best time to fix or activate your policy is now.

Need help finding a policy fast?
Check out: How to Shop for Home Insurance Without Wasting Time
Learn how to compare coverage, avoid hidden fees, and get quotes that actually fit your needs.