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Is Homeowners Insurance Required?

Is Homeowners Insurance Required? 

Unlike auto insurance, there are no legal requirements for you to have homeowners insurance in all levels of government. However, there are many benefits of having a valid and adequate homeowners insurance. 

It Will Be a Requirement by Your Mortgage Lender

Nowadays, most mortgage lenders demand proof of insurance during loan applications. This is because the policies cover damages resulting from harsh weather conditions, fire, and vandalism. 

If you fail to purchase adequate coverage, a lender can buy a policy in your name and add the cost to your monthly bill. Usually, lenders don’t shop around to get better deals for homeowner’s insurance. Therefore, you’re likely to pay premiums for policies you can get at lower rates. 

It Offers Protection for Your Home and Other Property

Even the most basic policy will safeguard your property against risks such as fire outbreaks, vandalism, and severe weather. Regardless of the extent of damage to your property, homeowner’s insurance can help to pay for repairs and replacement costs, and you’ll end up saving a significant amount of money.

It can also cover the replacement costs for items such as furniture, appliances, and clothing. Also, if your house becomes uninhabitable due to catastrophic events, your policy may pay for additional living expenses while the repairs are undergoing, or when looking for a new home. 

You Get Protection for Your Liability and Property Value

Other than offering coverage for structural issues, your homeowner’s insurance can offer protection if third parties sue you for injuries when inside your property. For example, if a child in your neighborhood gets injured while swimming in your pool, their parents may sue you.

Policies may have a liability clause, which will cater to the medical bills, legal fees, and income lost during due to such lawsuits. It will also help to preserve your home equity. For example, when you renovate your home, its value will go up. 

Final Takeaway

Although there is no legal requirement to purchase homeowner’s insurance, the policy is necessary and has numerous benefits. The coverage will pay for different losses and save you a significant amount of money. 

Updated on April 19, 2020

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