If you’re thinking of buying a house, or you’re already in the process, the term homeowners insurance is definitely something you’ll come across time and time again. The home that you’re purchasing will likely be one of the most valuable assets you’ll ever own. Homeowners insurance will protect that asset, and in turn, it will protect you too.
Now technically speaking, homeowners insurance is not required by law, but most mortgage lenders will require at least basic insurance coverage for your home. That’s because your mortgage lender is also an investor in your home. They don’t lend if their investment is likely to take a hit because of a lack of insurance protection. It’s in their best interest to ensure your home will be safe from disaster, which is why most lenders require homeowners insurance.
Your mortgage lender must make sure that should the worst happen to your joint asset (your home), you’ll have the funds necessary to take care of it. If you don’t have homeowners insurance though, you’d have little to no mortgage value. Both your lender and you would lose your asset as you would be solely responsible for covering the cost of repairs or damages.
A homeowners policy will also protect your personal belongings in case of thrift, damage and loss. You can add on additional coverage to your homeowners policy with a personal liability line. It protects you from being sued for damages. There’s always a chance a visitor could get hurt on your property, and if that injury leads to medical fees (aka bodily injury), you could be held responsible.
In the end, homeowners insurance isn’t something you’ll be forced to have, but it will be something you’ll want to have. Homeowners insurance is the best financial defense against bad things that may happen in life, giving you much-needed peace of mind.
Ash Emrich 