Do I need home insurance for a property that's mortgage-free?
I just finished paying off my mortgage. The mortgage lender told me years ago that I needed insurance for the property. Is this still the case?
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Answered on Mar 01, 2021
That is a great question! Legally, you can own a home without homeowners insurance if you’re mortgage-free. However, a home is very different from a car. Once a car loan is paid off, there are parts of an insurance policy that you may not need anymore due to the depreciation of a car’s value over time. But if you are lucky enough to be living mortgage-free, there is still the exact same potential for loss as there was when you had a mortgage.
In general, the cost of replacing or repairing your home can get more expensive as the cost of building materials and labor increases, and your homeowners policy will provide coverage for this. Aside from the structure of the home, you are also covering your personal property and liability; these things will always need protection.
To learn more about what homeowners insurance covers, check out this article: What Is Property and Casualty Insurance?.
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