Pros and Cons of South Carolina Home Insurance
If you just sent in your final mortgage payment you may be considering dumping your homeowners insurance as well. While it may seem like a great idea to shed this monthly payment, leaving your home unprotected by insurance can be a huge mistake if you end up on the wrong end of a hurricane, fire or lawsuit.
Homeowners insurance is usually required and for good reason. It only takes one major storm, a fire or other disaster to destroy your home. If you have a mortgage on your home your lender will absolutely require you to carry a homeowners policy in order to protect their investment. The majority of us recognize the importance of coverage, data from the Insurance Information Institute (III) shows that 98 percent of homeowners with a mortgage carry homeowners coverage.
Once you have paid off your mortgage, homeowners insurance becomes optional but this is rarely a good idea. Statistics from the III found that only 3 percent of homeowners are going without insurance coverage. In the majority of cases, the only people going without homeowners insurance are those that simply cannot afford it or are wealthy enough to self-insure.
Luckily, South Carolina is pretty affordable when it comes to homeowners insurance. According to ValuePenguin, the average premium in the Palmetto State is $1,240, which is only 14 percent above the national average. Premiums can be much higher if you are oceanfront or living on the coast in cities like Myrtle Beach, Georgetown, or Charleston.
If you are in the position to drop you homeowners insurance we highly recommend that you take a moment to give it some serious thought before pulling the trigger. Here is a quick overview of both the pros (there is only one) and the cons (there are many more) of going without homeowners insurance.
There is Only One Pro
Unfortunately, there is only one pro to dropping your coveragebut it can be a very persuasive reason.
Cost: Getting rid of your monthly insurance payment is really the only pro when it comes to dumping your homeowners insurance. While sticking at least $1,200 (or more) back in your bank account can be a big motivator, in the end it can be a huge financial mistake.
If you decide to dump homeowners coverage you will be responsible for the entire cost of rebuilding your home and replacing your destroyed possessions. You will also be on the hook if someone is injured in your home. Medical bills and lawsuits can quickly add up to millions of dollars. Unless you can easily cover these types of expenses, dropping your coverage is a mistake.
As Hurricane Florence recently reminded us, South Carolina is a frequent victim of severe storm damage. Unless you are carrying homeowners insurance (and flood insurance) you will be responsible for the cost to rebuild your home.
Reasons to Maintain Coverage are Plentiful
There are a number of reasons it makes sense to keep homeowners insurance in place.
Repair and Rebuilding Costs:The number one reason that you should protect your home with insurance is the cost to repair or rebuild it if disaster strikes. If your home is severely damaged or destroyed and you don’t have insurance you will have to cover the cost of rebuilding and replacing your possessions, which can be a major expense. Unless you can easily afford this, you should be carrying coverage.
Even if you live in one of our beautiful inland cities such as Florence, Rock Hill or Columbia, you can’t be sure that a major storm will never impact your home. It is important to remember that it is not always bad weather that destroys or damages a home. Fire, wind, vandalism and even lightening strikes can cause major damage that come with huge repair bills.
According to Zillow, the median home price in South Carolina is $164,100 but home costs are much higher on the coast or if you live near a beach. Without the proper insurance coverage, you will be forking up the $164,0000 (or more) to rebuild your home and lets not forget about the cost to replace your possessions.
Homeowners insurance also covers any outbuildings on your property such as detached garages, sheds, barns, and any other detached structures. There can be coverage limits on these types of structures so check with your agent for details about your specific policy.
Liability:Liability risk is another reason you should be carrying a homeowners policy. If someone is injured on your property, medical bills can quickly spiral out of control and if you dumped your coverage you will be responsible for covering these costs.
In addition to medical bills you may end up on the losing end of a lawsuit and without coverage the legal bills and any resulting award will be yours to pay. Legal bills add up quickly and if the injury was serious, judgments can run into the hundreds of thousands of dollars. This can put all of your assets at risk, not just your home. It is possible to lose your retirement savings, cars, and any other major assets you own.
If you are dead set on dumping your homeowners coverage we highly recommend carrying an umbrella policy to help protect your liability risk.
Living Expenses Are Covered: Homeowners insurancenot only helps cover the cost of replacing your home and covering your liability risks, it can also help pay for daily expenses if your home is too damaged to live in. Cost of living coverage will reimburse you for everyday bills such as hotel bills, cost of restaurant meals as well as items such as laundry. All of these costs can add up making this coverage a financial lifesaver.
All of Your Possessions: It can be hard to put a dollar amount on the value of all of your possessions but we guarantee it is more than you think. Look around your home and then imagine having to pay to replace all of your possessions. If you cannot easily afford to replace everything, you should be carrying an insurance policy.
Theft, burglary, fire and wind can all put your possessions at risk leaving you on the hook to come up with the coin to replace everything you own. Crime rates can vary dramatically between cities but according to Neighborhood Scout, residents of South Carolina have a 1 in 31 chance of being the victim of property crime. This translates into roughly 31,000 burglaries a year.
One thing you should be aware of when it comes to homeowners insurance is the fact that high value items have a coverage cap. While the cap will vary by insurer, $1,500 is fairly common. This coverage limit applies to items such as jewelry, artwork, collectibles, as well as wine and cigar collections. If you have high value items that exceed these amounts you should consider a rider to fully protect your property.
A Few Homeowner Insurance Tips
Here are a few tips when it comes to homeowners insurance:
Flood and Earthquake Damage Not Covered: A standard homeowners policy will not cover damage caused by flooding or an earthquake. This means that if you are in a high-risk flood area you should be carrying a separate flood insurance policy. Flood insurance can be expensive but it is well worth the cost if you home is flooded.
Raise Your Deductible: This is a great way to lower your premium and make your insurance more affordable. If you can afford to double your deductible your premium should drop around 20 to 25 percent depending on your policy parameters. Always choose a deductible that you can easily afford in the event you have to make a claim on your policy.
Discounts Matter: Insurance companies offer a variety of discounts and your job is getting all of the discounts you are qualified to receive. Ask your agent to perform a discount review on your policy to make sure you are getting all discounts.
Shop Around: One of the best ways to lower your insurance costs is to shop your policy. Insurance companies rate risk differently, which often leads to dramatically different policy quotes. Experts recommend getting at least five quotes and make sure you are comparing apples to apples when it comes to coverage levels and deductibles.
HomeInsuranceKing.com is happy to help you compare up to 12 rates and coverage options. If we can help you save money, while also improving your coverage, please click here to get online South Carolina home insurance quotes now.