Whether you’re thinking of buying a house, or you’re already in the process, homeowners insurance is definitely a term you’ll come across. That home you’re purchasing will be one of the most valuable assets you’ll ever own. Homeowners insurance will protect that asset, and in the long term, it will protect you too!
Is homeowners insurance required by law?
Unlike car insurance, which is required by law, homeowners insurance is not. However, most mortgage lenders will require some basic form of homeowners insurance.
Your mortgage lender will make sure that if the worst happens to your joint asset, you’ll have the funds to take care of it. Because if you don’t, you’d have little to no mortgage value, and you’d both lose your asset.
Do I need homeowners insurance?
Even if you are able to purchase your home outright with cash, you’ll still want to invest in some homeowners insurance. Why, you ask? here's a few reasons:
1. Home insurance protects your house
After going through the trouble of financing your new home, that same chunk of change may not be readily available if something happens and you need to repair or rebuild. Home Insurance will keep you protected if a huge unexpected disaster takes place, like a fire or windstorm, and you’ll save hundreds of thousands on out-of-pocket expenses.
2. Home insurance protects your belongings
Your personal property is also covered by homeowners insurance. It protects your precious valuables in case of theft, damage, or even loss. Its always unfortunate when something valuable gets stolen, but having the money to replace it would definitely soften the blow.
3. Home insurance protects you from lawsuits
There’s always a chance a visitor could get hurt on your property, and if that injury leads to medical fees (aka bodily injury), you could be sued for damages. This type of coverage is called personal liability, and it’s really important to have.
4. Home insurance helps you sleep at night
When thinking about worst-case scenarios, our imagination can run wild. Homeowners insurance won’t exactly stop bad things from happening, but it will give you the necessary protection and peace of mind that if they do, you’ll be able to handle it.
In the end, even though home insurance isn’t legally required, it may still be in your best interest to purchase a policy.