You may not like your homeowners insurance policy, or any insurance policy for that matter. But you probably realize that if you own a home, you'll need to carry homeowners insurance. In most cases, you'll need homeowners insurance for as long as you live in the home unless you have unlimited cash resources at your disposal.
Unless you inherited your home from a relative or a complete stranger gave you his home out of the goodness of his heart, you'll probably need to take out a mortgage loan when you buy your home. A mortgage obligation also creates a lien, or a legal right that the lender has regarding your property. Your lender can, and likely will, require that you carry what it deems to be an adequate amount of homeowners insurance. If you fail to do so, the lender could initiate foreclosure proceedings, and you could lose your home.
After the Mortgage
Once the mortgage is paid off, you may be tempted to send your homeowners insurance packing, along with that hefty premium you pay. Keep in mind that if you do so, you'll be on the hook for any repairs that would have been covered by your policy. And if the worst happens and your home is destroyed by fire or another covered peril, you could literally be left out in the cold.
When your home is finally paid off, you may figure that you can use the money you had been paying toward the mortgage to start a fund to pay for any repairs to your property. But you may still be left vulnerable to a potential lawsuit. If a visitor to your home slips and falls and suffers a serious injury, you could conceivably lose all that you own. The liability component of your homeowners policy will protect you against these types of occurrences.
Just because you'll likely need to carry a homeowners insurance policy doesn't mean you have to keep the same policy for as long as you live in the home. Homeowners insurance rates can vary greatly among companies. Events like your insurer experiencing a large number of claims in a short period of time can also have a big effect on premiums. You could benefit by at least shopping around for a new policy every couple of years.
- Jupiterimages/Comstock/Getty Images
- What Happens If an Escrow Account Becomes Negative?
- How to Protect Rental Property From a Lawsuit
- What Does $500/$1500 Deductible Mean?
- How to Write a Letter to Cancel a Health Insurance Policy
- How to Get Additional Flood Insurance
- Homeowners Policy Vs. Flood Insurance
- Does Flood Insurance Cover Heavy Rains?
- How to Calculate if the House Price Is Worth Buying for Renting Out?
- What Happens if You Get an Escrow Check That Is Too Much?
- Tips on Estimating Water Damage Loss With Insurance Adjusters