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Why You Need Homeowners' Insurance

Written by Posted On Thursday, 11 January 2018 21:35
Woman contemplating homeowner's insurance. Woman contemplating homeowner's insurance. Credit:

Even the most careful homeowner can have a sudden tragedy happen to their home. Fires and falling trees cause damage all the time. That’s why there is homeowners insurance. Most mortgages require that you have it for at least some percentage of the life of the mortgage, but it’s far better to carry it the whole time you own a home. Let’s take a look at some reasons why.

It protects your investment

This is the core reason why you need homeowner’s insurance. The chance of a fire or flood hitting any particular home is small, but when it does the home may be a total loss. Without insurance, you could find yourself on the hook for the rest of your mortgage with nothing to show for it.

However, there is a cost associated with it. Some owners drop their insurance after the mortgage is paid off just so they don’t have to worry about it. But unless you’re sitting on so much money that you can pay for any damages, this is risky. The average homeowner’s insurance claim is around $10,000, while the average premium is around $1200 per year. Considering that most homeowners only make a claim once every 10 years or so, it balances out.

One important caveat is that most homeowner’s insurance policies do not cover floods. Floods are so damaging to homes that it would be ruinous for insurance companies to cover them. That’s why the government provides flood insurance for homeowners, which you should purchase if you’re in a flood-prone area.

Liability Issues

Another way that homeowners insurance protects you is from liability from others if they get injured on your property. This is a benefit that most don’t think about until it is too late. Let’s say that a car crashes into your property and you’re deemed to have some level of responsibility for it. Your homeowner’s insurance wouldn’t just cover the cost of the damage. It would also cover for your portion of the injuries to the driver.

Jason Hennessey, marketing consultant for Atlanta Car Accident Lawyer, has this to say about the importance of having it: “Premises liability lawsuits are often thought of happening only on commercial property, but it can happen on private property as well as long as you’re not trespassing. Without homeowners’ insurance, your personal assets could be seized to pay for a liability claim if you’re at fault.”

It’s not just car crashes or slip and falls either. Even things like dog bites can be covered by your homeowner’s policy. Review your policy yearly to see what it does and doesn’t cover.

Protects your goods

Another thing that homeowner’s insurance protects you against is theft. If someone breaks into your home and steals your property, you can make a claim on your homeowner’s insurance to cover the costs of what was stolen up to your policy limit. The same thing applies to loss of property due to natural disasters.

If you have a lot of expensive items, this is one section of your insurance you’ll want to negotiate so you’ll have sufficient coverage. You can learn how much you’ll need by creating a home inventory and updating it yearly. This will also be helpful when documenting your losses to your insurance company. Be sure to keep a copy of it away from your home in case it’s destroyed!

The choice is clear. You should always carry homeowner’s insurance. Compared to the costs of paying for repairs or liability on your own, it is worth the tiny extra per month to keep your coverage.

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James Stevenson

Hi, My name is James and I've been involved in the property and real estate industry for 10 years now. I hope people will like to read about my thoughts and experiences in the industry and please contact me if you want to discuss my articles further!

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