As most homeowners have heard before, purchasing a home is a major financial investment and should not be taken lightly. When you own a home, it’s important to consider carrying homeowners insurance.
This policy will protect your home by covering various situations that may impact your home, such as natural disasters, theft, injuries, home equity, and vandalism. This is why it’s imperative to have insurance in place to safeguard your home and family from financial risk.
If you still need some convincing, here are the top reasons why you should purchase homeowners insurance.
Your Mortgage Lender
Even though homeowners insurance is not necessarily required when purchasing a home, your mortgage lender will want you to carry insurance. This is because homeowners’ insurance provides home protection from loss, damage, and natural disasters.
Homeowners coverage will vary based on your mortgage, but if you decide not to purchase an insurance policy, your lender will likely purchase it for you. If this happens, your lender will add the insurance payments to your monthly mortgage bill. You will want to try to avoid this because having “forced coverage” is not only expensive, but it’s only focused on protecting your lender and the bank’s investment, not you or your home.
Protection from Loss
Standard homeowners insurance protects your home from many risks and hazards such as water damage, vandalism, storms, fires and so on. With homeowners insurance, you can have the peace of mind that you and your home will be safeguarded.
It doesn’t matter if your entire house was damaged, or just a small portion of it. The insurance will help pay for the repair costs and any replacements needed for the damages your home suffered, which is a great financial backing to have when owning a home
Some homeowners may have the impression that homeowners insurance only covers the actual structure of the home, but this is not the case. Most insurance policies comes with family liability insurance, which will cover you if you are being sued for an injury that occurred while on your property. For example, if someone slips and falls on the sidewalk in front of your property, you may be held liable.
If you don’t have homeowners insurance when an incident such as this occurs, there is nothing there to back you financially. But if you do have this insurance, it can cover things such as legal fees, medical fees and compensation for the injured person if they aren’t able to go back to work for a short while. Most policies allow up to $100,000 in liability insurance, but you can also purchase additional protection if you want to.
Protects Home Equity
Homeowners insurance also protects your home equity, which is the total amount of your home’s value. For example, if you make any renovations to your home, your home’s equity will rise. However, if something happens to your home, your equity is at risk. No homeowner wants to face re-building their home equity, so carrying homeowners insurance will ensure that you don’t have to start from scratch.
What is the Cost of Homeowners Insurance?
The cost of homeowners insurance tends to vary, but according to the Federal Reserve Bureau, the average homeowners premium costs between $300 and $1,000 a year. The cost depends on several factors, including things like the value of your property or any insurance deductibles.
Your home is one of your biggest financial assets. With homeowners insurance, you can have peace of mind knowing you have a safety net to protect your home from any potential disasters. If something ever happens to your home, your insurance policy will be there to rely on.