Why is homeowners insurance necessary?
I'm thinking of skipping homeowners insurance for the house I'm planning to buy, but my mom is begging me to buy a policy. Why is insurance necessary?
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Answered on Feb 25, 2021
A home is typically the most expensive purchase in a person’s life and a big investment. Homeowners insurance helps to protect that investment. For example, if your home burns down, your insurance will help you to rebuild it, replace your personal items, and pay for a hotel stay while your home is being rebuilt. If you do not have insurance, all of those expenses would be out of pocket.
Home insurance also covers your liability if you damage someone else’s property. For example, let’s say a tree in your yard topples over and falls into your neighbor’s home. Your homeowners policy will cover the damage to your neighbor’s house. Without home insurance, you would have to pay for the damage, which could be quite significant.
Furthermore, if you have a mortgage, the bank requires that you have a homeowners policy in place on the day you close or finalize your home purchase. Once you pay off your home, homeowners insurance is no longer required, but it should definitely be kept for your protection.
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