When does a policy typically lapse?

A policy typically lapses when the insured fails to pay premiums. This is crucial because insurance policies are agreements that require regular payments to maintain coverage. When a policyholder neglects to make timely payments, the insurer has the right to terminate the policy, leading to a lapse in coverage. This represents a significant risk for the insured, as they may find themselves without protection against potential claims or losses.

While other factors like changes in address or renewal periods may affect the status of a policy, they do not directly lead to a lapse. A policy can continue to be in force during a renewal period or after a change of address, provided that premiums are paid as agreed. Additionally, reaching a maximum coverage limit may require a reassessment or increase in coverage but does not inherently result in a lapse. Thus, failing to meet the payment obligations is the primary cause of a policy lapse.