Home insurance is like an intangible product that makes some people cringe especially when it comes to monthly premiums. It’s like pulling water into sand. However, individuals who are situated in prime locations, purchases and pay their premiums so that they can rebuild their homes in case problems arise. So in a nutshell, home insurance is something you need to buy but hoping that you would not have to use.
This article will be talking about the importance of home insurance and why you need one for your property. Read on to understand some key reasons why it’s necessary to have homeowners insurance.
Insurance and Lenders
If you are looking to loan or mortgage your home, the lending bank or lenders will be asking for proof that you have insured your property. This is necessary because the bank or other lending institution would want to make sure that the investment they will be making on your property is safe. Money and property alike are an investment. A valuable asset one person or company has.
In fact, during the process, insurance experts will check the property for general upkeep and determine the level of the needed coverage.
Different Insurance Types
The standard homeowner’s insurance policy provides financial assistance to cover for damages to your home that are possibly caused by fire, vandalism, lightning, theft and more. In addition, home insurance also covers for loss or damaged personal property that is likely caused by theft or other covered loss. However, expensive assets such as jewelry may need to be insured for additional rider policy coverage to have a much higher insurance cover.
Opting out from home insurance can result in a higher financial loss if you happen to experience losing possessions without cover. Furthermore, insurance help pays for the costs if someone sues the homeowner. Liability insurance can be increased by adding an umbrella or extension coverage.
In every home insurance policy, there is always what we call a limit. That is why it is very important that you read all the fine print. Among the many exclusions of a standard policy are damages caused by earthquake and flood. Property damages that are caused by chronic and extreme neglect and faulty damages are not covered as well. Moreover, certain limitations are also added to mold-related situations and caveats for specific dog breeds present on the property.
Other Insurance Options
Homeowners living in high-fire areas such as the Southern California foothills are offered with California’s FAIR Plan coverage. FAIR which stands for Fair Access to Insurance Requirements has policies that are expensive and is limited in scope. For those individuals with FAIR Plan coverage are allowed to supplement their policy by adding private coverage, through wrap-around policies. For those homeowners who already have coverage, they may be regulated by the state government in California over earthquake policy availability.
Because of the high policy premiums and deductibles, some owners will be discouraged to purchase earthquake coverage, believing that their home will never be involved in a quake.
Often, some people would think that since they don’t require a home insurance they would drop the idea altogether. However, a homeowner who doesn’t have home insurance may lose the building and a place to live in the event of damage.
You may end up paying a lot over medical bills, lost wages or even losing your home for good just because you no longer have insurance.