Understanding Insurance Issues

3 Reasons Having A Homeowner's Insurance Policy Is Important

State laws do not require you to have homeowner's insurance if you own a home, as they require you to have car insurance if you own a car. If you have a mortgage, your lender will require you to have homeowner's insurance. However, if your house is paid off, no one will be demanding that you have coverage. That doesn't mean you should drop your coverage just because your mortgage is paid off or you were able to purchase a home with cash.

Reason #1: Protects Your Home

The most important reason to have homeowner's insurance is that it protects your home. If a fire strikes your home, or if a windstorm damages the roof, without homeowner's insurance, you will have to pay for all the repairs on your own, which are probably more than you can afford out of pocket. With homeowner's insurance, when a disaster ruins part of your home, all you have to do is pay a deductible, and you can rest assured that your home will be fixed, and you can keep living in your home.

If you cannot use your home while it is being fixed, your insurance will cover the full cost of you having to stay somewhere else, from lodging and food to transportation money and laundry cash. Not only will your insurance fix your home if it is damaged, but it will also make sure you have a place to stay.

Reason #2: Protect Your Belongings

Most people collect a lot of belongings over the years. If all your stuff was stolen or damaged, it could be beyond your means to replace it all at once. With homeowner's insurance, if your belongings are damaged or stolen, you will be given money to help you replace the items. Determined on your policy, you will be provided with money to replace the items based on their value right now or based on the value when you bought the items. Either way, although you will not get your stuff back, you will get help replacing it.

Reason #3: Liability Protection

You don't want to think that someone could get hurt while at your home and sue you for the damages, but it can happen. With homeowner's insurance, you can have your insurance pay for the medical bills of someone injured at your house without them suing you. If they do sue you, though, your insurance will cover the legal and settlement costs, so you don't have to worry about losing everything you have just because someone was injured on your property.

Even if you are not required to carry homeowner's insurance, doing so is a smart move. Carrying homeowner's insurance protects your home and belongings and helps to ensure that an accident on your property will not damage your livelihood.