Is Home Insurance Legally Required and Do You Need It?

The brief, yet precise answer to this question is “no” – a homeowner is not obligated by any law to purchase a home insurance policy, although it’s completely understandable and even recommended to protect the property you own against any potential, unforeseen damages such as flood, fire, burglary, storm or any other natural disaster. Another thing to keep in mind – if you’ve taken a loan to purchase the home, a bank, another financial institution or the lender might make it a requirement to obtain insurance for the property in order to protect their interests. In this article, we will list a couple of reasons why you should be a proud owner of a home insurance policy.

Don’t Take Any Chances

If you are a homeowner, the smart thing to do is to protect your home or property against all potential danger; it is up to you to make the decision though. You might take a chance and hope or even be so lucky that nothing bad ever occurs to your property. Nonetheless, if anything bad does happen, rebuilding and repairing expenses will be on you. Some of the damage might seem minor, like a blown off roof tile or a broken window, but things like theft, hail, non-weather-related water damage, exterior wind damage and weather-related water damage might be a more costly problem to fix. This is where the home insurance policy is supposed to kick in and cover all of those unanticipated damage costs. 

Understand What is Covered by the Policy

Before even considering buying a home insurance policy, thorough research and information gathering is of utmost importance and the initial step. In order to find the right program for your needs, you should be well aware of the coverage details. It is advised to contact a professional or your insurer and talk about your preferences concerning the insurance coverage. Ensure that you have all required information about the said insurance policy, what it covers and what is left out; adjust the policy accordingly, before finalizing the home insurance plan and signing it off.

Understand the Risks Behind Underinsurance

Before calculating the premium, a home insurance policy provider considers multiple factors. One of the main factors is understanding the rebuilding cost of your house or property. As the property owner, you might decide to declare a substantially lower rebuilding cost in order to save some extra money. Although this sounds tempting, bear in mind that this action might cost you more in the future; be sure to double check the legitimacy of this move, as underinsuring your property might have potentially heavy financial consequences. 

Is Insurance Needed If You Are Renting?

If you decide on renting your property, again, it is completely up to you, nevertheless it is recommended that you at least insure the structure of your home if you plan on renting it. By protecting the structure of your home, you are shielding yourself from additional costs if any damage occurs. On the other hand, the tenants are responsible for the property contents, so be sure to evaluate their worth before considering if you should cover them as well.

Getting an Adequate Rebuild Cost

It’s a good idea to ask for a professional evaluation of the accurate rebuilding cost of your property, before you look for a quote on a home insurance policy. Pro tip: be sure to keep in mind that the costs behind the rebuilding may change over time. 

Cover the Contents of Your Home

When talking about a home insurance policy, we are usually considering the structure coverage. However, another available option is to also cover the contents of your home. Any home surely contains at least a couple of valuable items, which range from electronic devices to jewelry or expensive works of art. Again, it is up to you to decide if you need it, depending on the overall item value and your personal preferences. 

To sum up, a home insurance policy might be perceived as quite a luxury if it’s not an absolute necessity for you and your personal needs. Consequently, buying and setting up a home insurance policy is completely up to you. Before doing so, be sure to understand and pinpoint your preferences, do the research, contact a professional/insurance provider, talk about your needs & wants and only then sign off on a home insurance policy.

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