What Happens if Your House Burns Down and You Don't Have Insurance

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House fire (Photo: @kirill4mula via Twenty20)
If you own a home, chances are you have homeowners insurance. A homeowners policy helps protect your home when you suffer from a natural disaster or other peril that requires your home to be repaired or replaced. But what happens if you don’t have homeowner’s insurance and your house burns down?

Why Do You Need Homeowners Insurance?

When you buy a home, your lender will probably require that you have homeowners insurance. This is to protect the investment that they made in your home when they lent you the money to buy it. If something happened to your home, the lender would be out all of the money they paid for you to buy it.
Homeowners insurance also protects you, as the buyer, against losing your home as a result of one of the covered perils in the policy. One peril, fire, is a big risk to homeowners across the U.S. More than 27% of reported fires between 2014 and 2018 occurred in homes.

What Happens if You Don’t Have Insurance and Your House Burns Down?

While most homeowners have homeowners insurance, not everybody does. Maybe you’ve paid off your mortgage and are no longer required to have insurance. Maybe your insurance has lapsed and you haven’t signed up for a new policy. Whatever the case, what exactly happens if your house burns down and you don’t have insurance?
First off, if you do have a mortgage, you’ll still owe the mortgage lender the money they lent you, including the interest. Just because your home is burnt down doesn’t free you from this obligation. Failure to pay your mortgage company what you owe on the home will place you in default, meaning you could be foreclosed upon. In many cases, a lender will step in as soon as they find out you have no insurance on your home and might even choose a new insurer for you, sometimes at a higher premium than what you were paying before.
As you can see, it’s always a good idea to keep your home properly insured, especially if you still owe money on it. Even if it’s paid off, if you suffer a disaster without insurance, you’ll have no way to repair or rebuild your home unless you do so out of pocket.
Something else that comes into play when not having homeowners insurance is your personal property. Homeowners insurance provides some protection against the loss of personal property, including appliances in your home, paying to have them replaced if damaged or destroyed in a fire. Without insurance, you’re left to absorb that cost on your own.

What You Can Do if You Have no Insurance and Your House Burns Down

If for some reason you don’t have homeowners insurance and your house burns down, you do have some options available. And while these options are limited, they at least give you some recourse in such a situation.
Was the fire your fault? If it’s determined that the fire was someone else’s fault, you might be able to take them to court to sue for damages. A personal attorney should be able to help you determine your next course of action in such a case.
Look for help: You also have some other avenues, such as programs, charities, or benefits, that you can use if your house burns down and you don’t have insurance. Various organizations, such as the Red Cross, can provide some relief to homeowners who have lost their home, especially in areas hard hit by natural disasters.
In reality, there’s really no good reason not to have a homeowners insurance policy on your home. While nothing may ever happen to your house, if it does, you’ll be glad you did have insurance. In the long run, the expense of replacing a house far outweighs the cost of insurance.