Do I Have To Have Homeowners                   Insurance?

Do I Have To Have Homeowners Insurance?

The purchase of a house is one of the largest decisions we make in our adult lives. It is the time when we spend the most money on one object that we will utilize the most. In a house, we carry our lives, our treasures and our families – we trust our homes to keep all of these things safe from harm. Many home owners question the validity of needing homeowners insurance and wonder if they really need it or if they have to have it at all. The answer to this question is yes, in many cases and for many reasons.

If you’ve paid cash for your home and own it outright, then there is no one to tell you that you must have homeowners insurance. However, if you are like the millions of Americans who have a mortgage, then you are required to have homeowners insurance. The money you used to purchase your home came from a lender in the form of a mortgage. This means that the lender is actually the owner of your home until you no longer owe money to the lender. If you default on your mortgage payments, the lender can foreclose on your home and sell it to recoup their money. This is the reason that lenders require home owners to purchase homeowners insurance – to protect their assets and investment in your house.

If something were to happen to your home, such as a devastating fire, the house would likely be considered a total loss. If you don’t have insurance, can you, would you, still make the mortgage payments on a home you no longer own as it is ashes in the dirt? Chances are you wouldn’t be able to afford to. Insurance makes sure that in the event of any catastrophe; your home’s value is covered, which means that the lender can recoup their money from your home. However, if you do lose to your home to an event such as a fire, insurance will pay to rebuild your home and replace your possessions at fair market value. In the end, the lender still has physical property that they can, if you default on your payments, to sell and recoup their money.

All lenders require you to have homeowners insurance on your home that is mortgaged through them. Besides covering the assets of the lender, homeowners insurance also protects you. Think of everything you own – all of your clothing, furniture, appliances, dishes – all the ‘stuff’ in your home, as well as all the treasures that you hold dear. Now picture not having any of it and not having any way to replace any of it. You would have absolutely nothing – homeowners insurance protects you from that. In the event that something happens to your home, homeowners insurance covers your home to be repaired or rebuilt, and to replace all your ‘stuff’ inside your home.

Homeowners insurance is required by lenders and is written in your contract – this is why the lender required proof that you had purchased insurance before they would release the funds when you purchased your home. However, even if you own your home, homeowners insurance is something that every one who owns a home should have as extra protection from unforeseen and sometimes catastrophic events