Homeowner's insurance is something people buy for protection. But what does it protect? It protects your home, but it also protects your home's contents and includes liability coverage. Therefore, it covers accidents that happen to people who come to your house. You can see how important this coverage is if you're a homeowner, but when should you have homeowner's insurance coverage? Here is a guide to help you learn the answer to this question.
You need it to buy a house
Did you know that you can't close on a home purchase without home insurance if you're using a mortgage loan? When you involve a lender with a house purchase, they can dictate rules and requirements. One of these is having home insurance. They won't give you the loan if you don't buy a policy before closing the deal.
Lenders take risks when assisting people with home purchases. They don't know if a person will repay the money. However, they take steps to reduce their risks. For example, they only issue loans to people with good credit. Additionally, they protect themselves by requiring home insurance. If the borrower loses the house to a covered peril, the insurance policy reimburses the lender for the money they owe.
You should keep it during your loan
Your lender will require a policy during the loan. For example, if you get a 30-year loan, you must keep the policy for 30 years. Of course, you can switch insurance companies whenever you'd like. But you must keep insurance on the house if you owe money to a lender.
You should have it even after paying off your loan
When you make your final payment, you won't have a lender anymore. Therefore, you could drop your coverage, but you shouldn't. If you drop it and lose the house to a covered peril, you lose your home and the money you invested in it. Thus, the bottom line is that you should keep homeowner's insurance for as long as you own the property.
Protecting your home is crucial
As you can see, homeowner's insurance is something you should always have. It isn't an insurance type you should consider dropping, as dropping it removes your protection. If you want to protect your home, it would be helpful to keep a homeowner's insurance policy on the house at all times. You can learn more about your options and costs by contacting an insurance agent that sells home insurance.
For more information on homeowner's insurance, contact a company near you.
Share