Homeowners insurance is one of those expenses you should expect to incur when buying a home. In fact, you in general must mortgage insurance home owners insurance.
But what if you own your home outright or are buying one with cash that doesn’t require you to take out a loan? In this case, you may be able to technically get away without homeowners insurance. And unfortunately, that seems to be a path some property owners are taking.
Simply Insurance reports that while over 95% of U.S. homeowners have an insurance policy to protect their property, there is a small percentage of homeowners who do not have coverage, also known as “bare.” Now, if your homeowners insurance costs have risen recently, you may be inclined to drop the coverage yourself. But here are three reasons why this could turn out to be a very expensive mistake.
1. You may lose your home entirely if it sustains extensive damage
If you have a lot of money in your savings account, you may decide to just skip homeowners insurance because you’re tired of your costs going up and instead plan to dip into your cash reserves when damage occurs. The problem, however, is that in an extreme situation, you may need to completely remodel your home. And while you may have the money to cover $15,000 worth of flood damage, you may not have nearly enough savings to drop $250,000 to rebuild your home from scratch.
2. You may lose all your belongings if they are destroyed in a fire or flood
Homeowners insurance isn’t meant to protect just your home. The right policy can also ensure that you can receive reimbursement if your belongings, from furniture to electronics to artwork, are damaged due to a problem in your home (such as an electrical fire) or a weather-related event. Without insurance, you may have to replace multiple expensive items.
3. You may be sued if someone is injured on your property
One common component of homeowners insurance is liability coverage, and it protects you financially if someone is injured on your property. And this injury doesn’t have to happen indoors. If someone slips or trips while delivering a package to your door, they could potentially start a lawsuit if your property contains a hazard, such as an icy path or uneven sidewalk. If you go without homeowners coverage, you could find yourself personally sued for such an injury.
Read more: Check out our picks for the best homeowner’s insurance companies
How to find more affordable homeowners insurance
Homeowners insurance can seem like a cost-effective solution when your premiums keep rising. But you may end up facing catastrophic costs if you don’t have insurance, so it’s best no to waive this coverage. Instead, try to find ways to make your homeowners insurance more affordable. Some options include:
- Updating your insurer after making security-related improvements to your home, such as installing a doorbell camera or alarm system
- Get rid of items that could be considered dangerous, such as filling an inground pool
- Shop around with different insurers for better rates
- Pooling your homeowners and auto insurance policies for a discount
No one should skip homeowners insurance altogether. And while it’s getting harder to find coverage in certain states due to increases in extreme weather, there are still insurers to look out for in these situations. Make this effort so you don’t end up in the dire straits of having no coverage at all.
Our picks for the best homeowners insurance companies
There are many homeowners insurance companies to choose from. We researched dozens of options and shortlisted our favorites here. Looking for a green building discount or easy package rules? Want an easy-to-use interface? Read our free expert review and get a quote today.