Homeownership costs go beyond your mortgage payment. Your expenses may include utilities, upkeep and repairs, property taxes, homeowner’s insurance, and maybe an HOA or private mortgage.
It’s normal to try to find ways to save money, which could be the pitfall preventing you from getting insurance. You might ask, “Do I need homeowners insurance? How likely are house disasters? Is skipping it to save money acceptable?”
Not having insurance depends on whether you’re still paying off mortgages and what problems could occur, such as a break-in, natural disaster, or someone getting hurt in your home.
Here are five scenarios that make homeowners insurance worth the cost.
1. Your Mortgage Lender Could Send Your Loan into Default
If you don’t pay your mortgage on time, the lender can send your late payment to a collection agency. Then, that agency will let the credit bureaus know you didn’t pay on time. If the lender takes back the house, your credit score will decrease.
A foreclosed home also makes it harder for you to get a mortgage for another house from your current lender. If your home’s worth less than what you owe, you will have to pay the difference (you owe more on the mortgage than your home is worth).
2. A Natural Disaster Strikes and You Can’t Afford the Costs
Many homeowners insurance policies cover wind, hail, and fire damage from a natural disaster. If you don’t have enough money in the bank to pay for repairs after a tornado, hailstorm, or another natural disaster, you’ll have to find the money yourself.
One way to prepare for the financial risks of natural disasters is to have an emergency fund that can cover unplanned expenses.
3. Difficulties Selling Your Home When the Time Comes
If you don’t have homeowners insurance, your house could sell for less because potential buyers will want a lower price. The main reason is the cost of replacing your property in the event of damage.
You’ll also want to make sure you have an accurate home value. If your home’s worth less than you owe, you may be unable to come up with the funds to pay off your loan.
When thinking about selling your home, you could get a pre-inspection to assess its value and even have it professionally photographed.
4. Your Home Got Burglarized, and You Do Not Know What to Do
If a thief or vandal breaks into your home and you want to file an insurance claim, you’ll need to show the insurance company proof that there was a break-in. You can do this with photos and reports from police, neighbours, and family members. If the break-in damages are severe enough, you might have to get your home repaired or replaced.
If you can’t afford the repairs or new property, you’ll have to find other ways to make up the costs.
5. You Don’t Have the Cash to Pay for Medical Emergencies
If you’re injured on your property, you’re entitled to receive the entire medical treatment costs, regardless of your medical insurance. This is the case even if you do not have a homeowners insurance policy.
Generally, getting independent medical insurance to cover any medical costs is a good idea. If your injuries are so bad that you need surgery or other primary medical care, you might need to get money from somewhere else. You could get a loan from your family or a financial institution, but these loans can have conditions or be on unfavourable terms.
A house is a significant financial decision that takes a lot of work and planning. If you own it free and clear, it can make sense to forgo homeowners insurance. But if you are still making payments, a homeowners insurance policy will protect you from unexpected costs as you go.
A mortgage is not the only reason you should get insurance, however. Homeowners insurance is still a wise investment for various reasons.
We can assist you if you are seeking the best home insurance in Colorado. 5280 Insurance provides a courteous and knowledgeable staff of Protection Insurance Advisors to help you. Call us today and begin to enjoy the protection that you can rely on.