Is Homeowner’s Insurance Mandatory? Everything You Need to Know!
If you’re looking for ways to cut down on your monthly bills, one area that might seem tempting to cut is homeowner’s insurance. It’s a pretty hefty monthly expense, and what are the odds you’ll need it anyway?
But can you legally get rid of your homeowner’s insurance, and should you if you can? We’ll answer those questions and more for you here. But spoiler alert: you probably can’t get rid of your homeowner’s insurance, and if you can, you really shouldn’t.
Is Homeowner’s Insurance Mandatory?
Technically, if you own your home outright you don’t need homeowner’s insurance. That’s because there’s no law requiring you to get it. However, if you have a loan through a bank for your home, they’ll require you to have homeowner’s insurance.
Banks can do this because while you’re still paying for your home, they already spent the money for it. They want to protect their investment just in case something happens to it. They make getting homeowner’s insurance a contingency in the loan, so you need to get it if you don’t want to default on the loan.
Why You Should Always Have Homeowner’s Insurance
If you own your home outright, you don’t necessarily need homeowner’s insurance, but that doesn’t mean you shouldn’t get it. Because even if you don’t legally need homeowner’s insurance, it’s a protection you should absolutely have.
Your home is a massive investment, and if anything ever happens to it, you don’t want to lose out on everything. Homeowners insurance protects you from the unlikely event that something serious happens to your home.
Without homeowner’s insurance, if something happens to your home, you have to pay for all the necessary repairs and potentially rebuild your home entirely out of pocket.
Not only do most homeowner’s insurance plans cover the structure itself, but most plans cover the valuables inside your home too. While homeowner’s insurance can seem like an expensive monthly bill, the amount of protection you get from the plan makes it more than worth the expense.
Homeowner’s Insurance vs Flood Insurance
While homeowner’s insurance is absolutely something you should get for your home, even if you own it outright, it’s worth noting that most homeowner’s insurance policies do not cover flood insurance.
If you want and need flood insurance for your home, you should go with a FEMA-approved flood insurance provider. The good news is that they make it easy to find one, simply use the FEMA tool here to track down a flood insurance provider in your area.
Flood insurance is much like homeowner’s insurance in that you don’t need to purchase it, but if you live in a high-risk area, it could be part of the contingency for your mortgage. While we can’t make any official recommendations on whether you should purchase flood insurance for your home, FEMA recommends it for every home.
Once you look at your monthly payment and see how much is going to taxes, homeowner’s insurance, and interest, it can be more than a little frustrating. But while it can be frustrating, it all comes with being a homeowner.
The insurance protects your home in case something happens and gives you a little extra peace of mind that one disaster won’t wipe you out financially.
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