Unlike car insurance, you are not legally required to get homeowner’s insurance if you own a home. However, it is highly recommended that you do. If you’re worried about the cost, don’t worry- there’s a number of things you can do to lower the cost of your homeowners insurance.
Although it’s not legally required, if you finance your home with a mortgage, your lender will probably require you to get home insurance coverage to protect your home in the case of damage caused by unpredictable circumstances such as natural disasters. Once you pay off your mortgage, you aren’t required to have home insurance, but you should continue to keep your home insurance policy active to avoid risks and losses on what you’ve invested in your home.
Some people may see homeowners insurance as a bad investment since there is a possibility that they may never experience a traumatic event to their home and would prefer to place a similar amount of money in an account used purely for home emergencies. This is an option, however, in the case of an emergency you will most certainly pay a lot more money out of pocket than you would through an insurance policy.
If you live in an area that is prone to natural disasters such as flooding or earthquakes, your lender may require you to purchase flood insurance or earthquake insurance. If you don’t own your own house and own a condominium or pay rent instead, you may be required to buy condo insurance or renters insurance.
Although homeowners insurance isn’t technically mandatory, there are very few good reasons not to have it. Keep in mind that it protects an investment that is often the biggest expenditure during a person’s lifetime!
Any additional questions? Check out our Insurance FAQs page or call us at 415-386-2283!
Contributor: Smruthi Sriram