I’ve read that a holder is not covered by the insurance but will be informed should the policy lapse.

My State Farm personal umbrella liability insurance is lapsing b/c I now have 5 rentals and the maximum is 4.

Also, this doesn't take into account taxes needing to be paid for capital gains, any time lapse between deals, and other factors. 

Have never had a lapse in tenants, after we stabilized the property I did a cash out refi that worked as follows:Total Cash into property $95,000 (rehab, down payment, closing, etc).Total remaining loan amount when refinanced was $173,000.Got an appraisal at $450,000 for the building, put a new mortgage on it for $300,000K and got $127,000 in cash on the refi.

There isn't a lapse in pay, but there is a delay while the paperwork is completed. 

It was a relatively small amount of money, but any lapse in judgment like this costs you your good name.

That gravy train lasted for about a year until she turned 26.During that time we let my insurance lapse by accident.

Here is a time lapse video for Phoenix.

If the home was bought using a VA loan, I have it written into my contract that IF ASKED, I will refinance out of their loan within 6 months of being formally notified in writing, so long as a minimum period of 3 years has lapsed since I bought the property. 

Renters, at some point, will realize their unlawful protections have lapsed and adjust accordingly.