Budget Concerns: How Much Insurance is Enough?

3 Important Reasons To Keep Homeowners Insurance

28 February 2017

Dustin Duncan

Are you tired of spending money on paying for insurance for your home? Are you thinking about dropping your insurance coverage in an effort to save money? While this might initially seem like a good idea for your budget, there are a number of reasons why you should always have homeowners insurance for your house. Some of these reasons are obvious, others less so. A few of the more important reasons to keep your insurance policy up to date include:

Mortgage requirement: As part of buying a home, most mortgage lenders require that you keep an insurance policy on your house. If you should stop paying for your homeowners insurance and the bank finds out, they will add what is known as force-placed insurance to your monthly mortgage bill. This is where the bank decides exactly which insurance company and policy that you must pay for. Since banks don't shop around and may only have one insurance company that they use, this can make your new mortgage payment significantly more expensive than you were paying for your mortgage and insurance separately. If you're tired of the high price of your premium, you can shop around for a new insurance policy. Simply make sure to inform your lender if you should decide to switch so that they don't penalize you for dropping your insurance policy.

Liability: Do you live in an area of the country that gets ice and snow? If someone slips and falls on your property, even if you've kept up with shoveling and salting your sidewalks, you could be partially liable for their injuries. Even if the person is reasonable and bears no enmity towards you, some health insurance companies may refuse to pay hospital costs unless the injured party brings a lawsuit against the property owner. A good homeowners insurance policy will have a certain amount of liability coverage, protecting you from being sued directly.

Natural disaster: Things like fires, floods, or heavy winds are impossible to predict. Even if you are careful and take every precaution, it's possible that you could be the victim of a large tree branch crashing through your roof. Without homeowners insurance, the cost of fixing up the resulting damage could easily run into tens of thousands of dollars. But if you've been faithfully paying your insurance premiums, a good insurance policy will only require that you pay the deductible to have the damage fixed. To find out more, speak with a company like Blue Lion Insurance Advisors, LLC.

Share