Unlike car insurance, homeowners insurance is not a requirement for people who own a house.
Sure, mortgage lenders typically compel borrowers to insure their homes, but if you acquired your house with cash or any other means, you are under no obligation to purchase home insurance.
However, not having homeowners insurance could bring on more potential problems that could make you regret your decision not to spend it.
Let’s take a closer look at some of the possible consequences of not having home insurance.
You’ll Have To Pay For Damages Out of Pocket
No one knows when heavy thunderstorms, fires, hurricanes, tornadoes, and other disasters will strike.
When they do, there is always the risk of your home sustaining damage. Some even end up losing their entire home to a disaster.
If you have home insurance, you won’t have to worry about the cost of repairing your home or rebuilding it from the ground up. Your insurance provider will see to it that your policy will pay for part or all of it, depending on its limits.
If you decided not to insure your home, you would have to bear all repair or rebuilding expenses yourself.
You Won’t Have Protection Against Theft
Unfortunately, theft and burglaries continue to be prevalent crimes against property in the United States.
Since home insurance also covers any loss due to theft or burglary, you will miss out on that kind of protection if you don’t have such a policy.
You’ll Have No Liability Coverage
A standard home insurance policy protects you from liability that arises from an incident within your property that results in personal injury or property damage.
So, if a visitor enters your home and gets bitten by your pit bull, your home insurance policy will pay for that person’s medical treatment. Should things escalate and reach the court for whatever reason, your legal expenses will be taken care of by your homeowner’s insurance policy subject to the limit stated in it.
In cases where a member of your family causes damage to a neighbor’s property—like your child putting a baseball through the window of the house next to yours—your home insurance’s liability protection will also kick in and pay for repairing the damage.
However, if you don’t have an active homeowners insurance policy, you can expect to shell out a lot of money out of pocket if and when someone makes a claim against you.
Keep in mind that litigation can wipe out entire savings and render people bankrupt.
You Could Default Your Mortgage
Let’s assume that you took out a mortgage loan to buy your current home, which means you had to get home insurance coverage to comply with the lender’s requirement.
As a home insurance policyholder, you will need to pay the necessary premiums regularly to maintain your homeowners insurance coverage.
Fail to do so, and your home insurance policy will lapse. Your mortgage lender will know about it and will surely take action to protect their interest in your house, which is why they require homeowners insurance for mortgage borrowers in the first place.
At best, they will purchase homeowners insurance for your property and require you to shoulder the premiums, which would be worse for you if they bought the policy at a much higher cost than your lapsed one.
If your home insurance premiums remain unpaid, your lender will initiate foreclosure proceedings, and you will likely lose that home for which you’ve worked so hard.
There is no upside to not having home insurance. Secure a homeowners insurance policy now and avoid all the potential fallout that comes with having an uninsured home.