If you take out a mortgage to buy your home, then you will probably be required to buy homeowners insurance by your lender. However, what happens when you have paid off the loan? Do you necessarily have to keep your coverage?
Homeowners insurance isn’t something that is meant to be a mortgage lender’s way of charging you more money. It’s a critical piece of protection that will protect your dwelling, possessions and overall financial security against countless damage hazards and other liabilities. That’s why you need to maintain coverage regardless of whether you have paid off a mortgage.
Consider just a few of the reasons why:
1. Mortgage-Free Homes Still Have Value
Just because you don’t have a mortgage does not mean that your home isn’t still an investment of value. After all, you have spent years paying off the home, maintaining it and making improvements, and you want to be able to repair or rebuild your property following damage. Without homeowners insurance, you might not have the resources available to do so.
2. Damage Can Still Be Expensive
Homeowners insurance can help any owner receive financial assistance with the costs of numerous damaging events like fires, severe weather or vandalism. Therefore, if a severe windstorm damages your roof and siding, it is your home insurance that can pay for the requisite damage, rather than forcing to handle it all on your own. Regardless of whether you have a mortgage, there’s no denying that household repairs could be expensive, and it’s much better to have the benefits of strong homeowners insurance there to help you out.
3. Home Insurance Is About More Than Just Damage
In the end, home insurance is more than just protection for the value of your dwelling. It can cover a variety of other cost risks by offering numerous other benefits:
- Possessions coverage that will insure your belongings within the home in case of loss or damage.
- Living expenses coverage will help you pay for dining, hotel or other bills that might arise following an accident that forces you to temporarily move out of your home.
- Liability insurance covers you and your family if you are at fault for property damage or injuries sustained by someone who doesn’t live with you. So, if you hit a baseball through a neighbor’s window and into their china cabinet, this coverage can help you repay them for their losses.
All in all, your policy is much more comprehensive than just dwelling coverage that your mortgage lender might require. However, when you pay off the mortgage, this is a perfect time to talk to your home insurance agent about whether your existing coverage is still the best protection for you. They can help you make certain that your policy continues to offer optimized benefits throughout your life.
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