Risks Of Not Having Homeowners Insurance

A small percentage of homeowners don't have any homeowners insurance at all. This is especially common in states where homeowners insurance is not mandatory. If you don't have homeowners insurance, you are exposing yourself to various risks. Here are common dangers you face when you don't invest in homeowner's insurance. 

You Won't Get Secure Financing

A few home buyers have enough savings to buy a new home in cash upfront. But the average home buyer in the United States can't afford to do this. Most buyers require secure financing, such as a mortgage, to pay for their new home. One of the things that will help you get secure financing is homeowners insurance.

Homeowner's insurance would protect the lender's investment if something terrible were to happen. Therefore, you are unlikely to get a mortgage if you don't purchase homeowners insurance.

You Will Default on Your Mortgage

You may have gotten homeowners insurance when applying for a mortgage. Once you purchase the home with the mortgage, you stop paying monthly premiums. Your insurance will cancel your coverage and inform the mortgage lender. Failure to pay for mortgage insurance may violate your mortgage contract.

The lender might decide to get a new insurance policy for you. However, the new insurance policy will probably have higher premiums or not offer enough coverage for all your possessions. 

In some cases, you might be looking at immediate foreclosure if you don't have homeowners insurance. If you manage to fight the foreclosure, the new insurance policy will have higher premiums and higher deductibles.

Your Home Repairs Become Costly

Vandalism, wind, and hail are common in most places and can destroy parts of your home. 

Most homeowner's insurance policies will pay for the cost of repairing damages to your home. Although avoiding monthly premiums can be a financial boost, you may have to spend much more money to repair damages to your home when they happen. 

Your Property Lacks Proper Protection

Death, fire, accidents, and other types of disasters can lead to the loss of your property and personal belongings like valuable jewelry, artwork, appliances, and furniture. Homeowners insurance can help you rebuild your home and cover the cost of replacing lost belongings. The insurance policy can also pay for detached structures such as sheds or garages. 

Here are common values many insurance policies cover to help protect your property:

• Actual cash value. This includes the market value of the home and belongings, less the depreciation of personal items. 
• Replacement costs. This pays for the value of rebuilding your home and buying new personal items.
• Guaranteed or extended cost value. This pays for your home's comprehensive replacement or repair value at current market prices.

If you don't have homeowners insurance, you are likely to pay for the cost of rebuilding your home.

You Lack Protection Against Lawsuits

Whenever you make repairs to a property, you expose yourself to potential lawsuits. For instance, you might fail to indicate the area where the repairs are happening so as to warn visitors. Someone might stumble and fall on that repair site. If the person sustains injuries, they may sue you for negligence. 

Homeowner's insurance contains liability protection that can protect you when making repairs. Without homeowners insurance, you may suffer severe financial consequences. A court might order you to pay medical bills and lost income of the injured person. This bill might go on for several years if the person sustained severe injuries.

Getting the best homeowners insurance is not an easy thing. The Policy Center provides multiple options and has the information to help you shop for the best coverage. We can help you find homeowners and auto insurance protection at affordable rates. Contact us now for more information.