For most people, home insurance is necessary. As long as you have a mortgage, your lender will likely require insurance. Insurance helps a lender to mitigate the risk they take on by lending you the money.
Insurance for an Owned Home
What about after you've paid the home off, or if you've paid cash? As long as you're living in a home, as a renter or owner, you should have the type of insurance that meets your needs.
Unless you have unlimited money, you're probably not comfortable having an uninsured home. It would also not be financially prudent for you to do so.
The good news is that once you completely own your home, you often have a lot more leeway with your home insurance. You might be able to adjust your coverage to meet your needs. You won't have to worry about meeting any requirements of the lender.
Insuring a Rental Home in Every Scenario
But what about if you have a gap in home ownership? You take a new job across the country. You sell your current home and decide to rent for a few years while you decide if this is where you want to stay.
You find a lovely rental but decide not to get renters insurance on it. You're young and single, with few possessions. The money you save on insurance will help speed along your savings for a down payment. So why not assume the risk that you don't need it?
As a renter, you're items are almost never covered by your landlords home owners policy. This could spell financial trouble.
You might feel that your belongings aren't very valuable. But what happens when the basement apartment you're living in floods due to heavy rain? Buying a new wardrobe, kitchen items, television and computer, furniture and bedding will set you back. This only gets worse if you have a partner or kids who also have items in the home.
Second, when you do go to buy coverage in the future, there will be a gap in your history of having it. This might be an immediate red flag to the insurance company. Your premiums might be higher because they feel your behavior, not having home insurance coverage, is indicative of you being a higher risk.
So unless you have a net worth in the millions, it's never a good idea to not have home owners issuance. Insurance shouldn't be an option. It's protection for when life throws you the unexpected. It's something that you hope that you never need it, but when you do need it, you'll be so glad that it is there for you.
We've got you covered. Call The Mike Dyer Agency at 865-966-2111 to learn more about our home insurance options. One of our agents can help you get a policy quote for free right now.