Many new, or soon-to-be, homeowners have questions about home insurance. One the biggest questions new homeowners ask is: “Am I required to have homeowners insurance if I own a home?”
Unlike car insurance, you are actually not required by law to have homeowners insurance if you fully own a home in most cases. However, there are some factors which could change the answer to this question. Here are a few reasons you may be required to carried homeowners insurance if you own a home:
If you financed the purchase of your home with a mortgage, your lender will most likely require that you have homeowners insurance. The reason homeowners insurance is required by lenders is because they have made a large investment in your home. If something disastrous were to happen to your home, they are at risk for losing the money invested into your home. If you pay off your loan, you can choose to go without homeowners insurance.
Your mortgage lender could require you to carry earthquake or flooding insurance if your home is located in an area that is prone to flooding or earthquakes.
You may be required to have homeowners insurance if you own a home, condo, or townhouse that is apart of an association or co-op.
If the above factors do not apply to you, you may not be required to carry homeowners insurance. The truth is, just because you aren’t required to have it, going without homeowners insurance could very possibly be an unwise choice depending on your individual circumstances. When making this decision, you should keep a two things in mind:
Ability to replace your home. If an unfortunate event such as a a fire or a natural disaster were to ruin your home, could you afford to replace it without insurance? If the answer is no, you should really consider having homeowners insurance.
Possibility of a lawsuit. If an unfortunate event that took place in your home were to result in an individual being injured, would you be able to withstand the financial burden of a lawsuit? When making a decision about whether or not you want to have homeowners insurance, keep in mind that homeowner’s insurance will also provide liability coverage if anyone is injured in your home or on your property.
For many, it may seem like the monthly burden of paying high insurance premiums isn’t worth protecting yourself from events that may never happen. However, considering the financial devastation a disaster could cause in your life, it seems to be true that the smartest decision in most situations is to carry homeowner’s insurance, whether or not it is required of you.
New and soon-to-be homeowners should work with an independent insurance agent who can spend time researching and shopping around to find the most affordable plan,