Top 6 Reasons to Carry Homeowners Insurance

06 Mar

Your home is one of your biggest investments you will ever make and if it is damaged or destroyed you could be on the hook to rebuild it. This is where homeowners insurance steps in, it will help get your life back to normal by putting your home back together and replacing all of your possessions. 

While homeowners biggest benefit is that it pays to rebuild your home and replace your possessions it offers a variety of other protections. Here are six good reasons to carry homeowners insurance: 

#1 It’s a Requirement

Homeowners insurance is not required by the state like auto insurance, but if you have a mortgage on your home your lender will absolutely require that you carry coverage. Your lender will verify that you are carrying the proper amount and type of coverage. This is to protect their investment in your home if it is damaged or destroyed.

While homeowners insurance is not required if you own your home free and clear, unless you can easily afford to rebuild it and replace all of your possessions, it is a horrible idea to go without homeowners coverage. 

#2 It Protects Your Home

Nobody expects their home to burn to the ground or be knocked over by a tornado but it happens more often than you think. Even if you home is not completely destroyed, a major storm can blow your roof off or send a tree toppling through your garage and if you are not carrying insurance, all of those repair bills will fall to you.  

Homeowners insurance protects your home, possessions and any detached structures on your property. Make sure your policy replaces your possessions and rebuilds your home at a replacement cost basis instead of actual cash value, which takes deprecation into account when valuing your possessions and certain parts of your home such as the roof. 

#3 Your Personal Belongings Will be Replaced

If your personal possessions are destroyed or even stolen, a homeowners insurance policy will step up to replace them. The majority of policies protect your possessions even if they are stolen out of your car, while you are on vacation or even out of a storage unit. This can be a major benefit, take a minute to look around your home and calculate what it would cost to replace all of your possessions. 

It is important to carry replacement value coverage on you possessions as actual cash value polices take deprecation into account which can dramatically impact your payout after a claim. As an example, while a replacement value policy would replace your 10-year TV with a brand new one, an actual cash value will take those 10 years into consideration and your payout will most likely not be enough to replace your TV. 

Helpful Article: The Best Reasons Why You Need Replacement Value

#4 Liability is a Big Issue

A homeowners policy also covers liability risk which can be a financial lifesaver if someone injured in your home. Injuries can range from a guest slipping on an icy sidewalk to a fall down the stairs. 

Liability covers not only the medical bills of someone injured on your property but also your legal defense if they decide to sue. Your insurance policy will also cover the cost of a payout if you lose the lawsuit, up to your policy limits. 

If you have a lot of assets, you may want to consider an umbrella policy, which kicks in when you reach the liabilty limits of your homeowners policy. These policies are sold in $1 million increments and are very affordable. 

#5 Additional Living Expenses

This coverage will reimburse you for everyday living expenses if your home is so damaged that you cannot live in it. It will cover hotels bills, restaurant meals and even dry cleaning. If you are out of your home for months it may even cover the cost of an apartment. 

This coverage can be a major advantage if your home is severely damaged or destroyed and you are out of your house for months while it is being rebuilt. 

#6 Peace of Mind

Homeowners insurance provides peace of mind. Knowing that your home and possessions are protected in the event your home is damage or destroyed. In most cases, a home is a person’s largest investment and for the majority of people, rebuilding it out of their own pocket would be a financial burden. Insurance lets you relax and enjoy your home, knowing that it is fully protected. 

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