Reasons you need homeowners insurance

Reasons you need homeowners insurance

Whether you’re buying a new home or you’ve already paid off the mortgage, you may have wondered about the value of home insurance. Your home is likely one of the most valuable assets you have. Homeowners insurance helps protect that investment, and you, in a variety of ways. For a lot of people, a major factor in purchasing Homeowners insurance is that mortgage lenders often require it. That means it’s easy to think of a homeowners policy as something you’re forced to get. However, the reality is it’s something you should want, absolutely need and should not do without. This is even if you’ve paid off your mortgage or your bank doesn’t require you to have it. Here are some of the key reasons you need homeowners insurance.

What is homeowners insurance?

Homeowners insurance pays for losses and damage to your property if something unexpected happens, like a fire or burglary. When you have a mortgage, your lender wants to make sure your property is protected by insurance. That’s why lenders generally require proof that you have homeowner’s insurance. While a regular homeowners policy might help protect your home, it usually covers more than just the physical structure. A standard homeowners insurance policy may include the following coverages:

Dwelling coverage.

If your home and any attached structures, like a deck or garage, are damaged by a covered peril, dwelling coverage helps pay for repairs. The amount of dwelling coverage you need is usually calculated by the square footage of your house and what it would cost to rebuild your home. This is not necessarily the market value of your home.

Other structures coverage.

The other structures coverage in your policy helps pay for repairs or replacement for detached structures on your property, like a fence or shed if they are damaged or destroyed by a covered peril.

Personal property coverage.

Personal property coverage helps pay to replace certain belongings, such as furniture and electronics, that are stolen or damaged by a covered loss.

Personal liability coverage.

If you or a family member are found legally responsible for accidentally damaging someone else’s property or injuring someone, liability coverage may help pay for related repair costs and legal fees, in addition to helping with medical bills.

Reasons you need homeowners insurance

1. Satisfy your mortgage lender

Homeowners insurance is not a requirement in many areas. However, most banks and mortgage lenders insist you carry insurance. Why do they care? Insurance protects the lender’s investment in case the house is damaged. Lenders typically want homeowners to carry enough insurance to cover the amount of the mortgage.

2. Protects you from lawsuits

A typical homeowner’s policy protects against a lawsuit if someone is injured while on your property. Liability coverage pays the injured person’s medical bills and damages to property. Insurance will also pay an attorney to help defend you in a court case.

3. Protection from loss

Homeowners insurance will pay to repair or replace your house if it is destroyed or damaged by most natural disasters and human-made calamities. Remember when buying a homeowner’s policy, you need enough coverage to replace your house and its contents.

4. Replace your things

If your possessions are destroyed, homeowners insurance will reimburse you for the value of your property including appliances, furniture, clothing and other possessions. Many policies give you a choice on how to insure your belongings. You can get actual cash value or replacement cost coverage.

5. Protects Equity

For most of us, our home is the largest single investment we’ll make in our lifetime. Homeowners insurance protects the equity in your home. Equity is the value of a piece of property over and above any mortgage or other liabilities relating to that property. As you make renovations to your home, the equity in your property increases. Homeowners insurance makes sure if something happens to your home, you won’t have to start building equity again.

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