Is Homeowners Insurance Required?
Do you need home insurance? Technically, no. You don't. The law does not require you to have homeowners insurance. But even if you aren't legally obligated to get home insurance, you might find that purchasing a home is next to impossible without it.
Mortgage companies almost always require that you purchase homeowners insurance before they will agree to extend a loan. This is because home insurance helps protect their investment, providing funds to repair or rebuild the property if it gets damaged. Without the safety of homeowners insurance, your lender's several-hundred-thousand-dollar investment could be in danger, and that's a risk they simply are not willing to take. So, unless you pay cash for your property or inherit a house that's already fully paid off, you're going to need home insurance.
If you're still asking yourself “Why do I need homeowners insurance?” then consider that it protects you and your family just as much as it protects your mortgage company. How much of your finances are tied up in your home? What would happen if your home were destroyed, along with all of the possessions you keep inside it? Would you be able to financially recover from such a loss?
Homeowners insurance is not something you need, but it should be something you want. With the right coverage in place, you have a safety net to fall back on when your property takes a hit. This is why even after your mortgage is paid off, you will probably want to continue paying for home insurance.
Homeowners insurance helps safeguard you, your property, and your belongings, so that the money and time you've invested in your home doesn't go to waste.
What Does Homeowners Insurance Cover?
Although different policies may have different exceptions, most homeowners insurance covers the following:
- Your house, other structures on your property, and your yard.
- Your belongings.
- Additional living expenses incurred if you have to relocate while your home is being repaired.
- Legal costs associated with liability lawsuits.
How Much Homeowners Insurance Should I Have?
The amount of homeowners insurance you need depends on the value of the property and items it protects.
Your coverage should take into account the dollar value of the structure of your home and the surrounding property, as well as what it might cost to rebuild the home. Additionally, your coverage will need to include the cost of replacing belongings you may keep in the home, along with any living expenses associated with hotel stays or other arrangements should you end up being displaced. Finally, you will also need to include personal liability coverage.
How much does this amount to? Most homeowners insurance policies provide at least $100,000 in liability insurance, but you will likely need more than that if you want to feel fully protected. Figure out the total value of your property and belongings, and then use that as your ideal minimum—and if you can afford to bump it up further, then that might not be a bad idea. For the average homeowner, something in the range of $300,000 to $500,000 coverage may be appropriate.
There are many different expenses associated with homeownership, and homeowners insurance is one of the most important. Get the protection your property deserves; contact Acrisure today, and be ready for whatever may come your way.