Why I Bought Homeowners Insurance Even Though I Didn't Have To
- Mortgage lenders generally require home buyers to purchase homeowners insurance.
- If you don't take out a mortgage, you typically don't have to get covered.
- I bought homeowners insurance even though I didn't have to.
There's a very good reason to get homeowners insurance even if it isn't required.
Recently, my husband and I purchased a vacation home without taking out a mortgage. We had the proceeds from the sale of a previous property that made this possible. And we opted out of borrowing because we needed to close on the home quickly in order to convince the sellers to choose our offer over other higher-priced ones and it can take a long time to get a mortgage approved.
Because we did not take out a mortgage on the property, we weren't required to buy homeowners insurance. See, while most states mandate that drivers buy auto insurance coverage, there's no comparable requirement when it comes to homeowners insurance. If purchasing this type of coverage is required, it's typically only because lenders impose a mandate as a condition of closing on a loan.
Despite the fact we did not have to buy homeowners insurance coverage if we didn't want to, we chose to get a comprehensive policy that provides substantial protection and that costs us close to a thousand dollars each year.
There's an important reason to buy homeowners insurance even if it isn't required
For those home buyers like us without a mortgage who do not have to buy homeowners insurance, it still makes good financial sense to put this protection in place.
It is very expensive to buy a home, with properties typically costing hundreds of thousands of dollars. And on top of the purchase price of the property, it's expensive to fill a home with furniture and personal belongings ranging from furniture to clothing to electronics.
Very few people can afford to lose the money they invested in their home and the stuff that's in it. And most people can't afford to pay for major repairs that might be necessitated by something like a fire or a tree falling on the house. And even if you can afford to pay out of pocket to replace a home and all of the possessions within it, this would be a huge waste of money when it's possible to pay affordable home insurance premiums to transfer this risk to an insurer.
In addition to the coverage for the property and its contents, it's also important to buy liability insurance. This is a policy that pays out if someone is injured on a policyholder's property. Since an injury could cause millions of dollars in damage, this coverage may be even more important than protection for the house since a homeowner might otherwise have to pay out of pocket if someone is hurt and the property owner is held legally responsible.
Purchasing home insurance coverage provides crucial asset protection
The bottom line is, my husband and I did not want to gamble our financial future on everything going right with our new home. We wanted to make sure that if something happened, our insurance would allow us to repair or rebuild or compensate those injured on our property so we didn't lose a fortune.
Most homeowners should do the same, so regardless of whether insurance is mandatory, buying home insurance is a purchase everyone should consider making.
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