Why You Need Home Insurance?

Mortgaged Homes:                                                  

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If you have a mortgage on your home, you need homeowners insurance as a condition of that loan. This is the way the lender protects the investment that it has in your property. If you were to suffer a catastrophic loss of the home, the lender could recoup the value of the loan from an insurance claim. In this case, you have no choice about seeking out and later renewing your homeowners insurance. If you fail to renew, the mortgage holder will be notified and will likely instate its own policy which can be more expensive than a policy you obtain on the open market.

Catastrophic Loss:                                                         

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If you own your home outright and choose to go without homeowners insurance you are running the risk of suffering the risk of losing what is probably your biggest financial asset. If your home is destroyed, you will have to deal with the consequences of the complete loss of an asset that is probably worth thousands of dollars.

Liability:                                                                        

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If someone slips and falls or injures themselves in another way on your property, you might be liable for expensive medical bills and the cost of a lawsuit. Homeowners policies cover most if not all of the costs accrued due to medical bills and court costs in liability cases. If you have no insurance, you could potentially be liable for millions of dollars in medical bills and damages.

Financial Consequences:                                                 

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If you drop your homeowners coverage and later decide that you want coverage again from another company, you might find it difficult. Insurers tend to be suspicious of homeowners who drop their coverage. They may refuse to insure you or if you are offered a policy it may be at a significantly higher premium than what you were previously paying because companies will view you as a higher risk. If you drop your homeowners coverage you are not protecting your assets. This can be a red flag to credit card companies and it can negatively effect your credit score.