Homeowner’s insurance is required by mortgage lenders, but why do you need it and what does it protect?
For most of us, a home is the most valuable investment we make in our lives. That’s why, if something horrible happened to it (and let’s hope it never does), your investment should be covered. Most mortgage lenders also require that you have homeowner’s insurance because if something were to happen to your home, they would want to be sure that those costs would be covered and their investment would be protected. After all, the lender has a vested interest in your house staying in good condition until you pay it off.
But what does homeowner’s insurance actually cover? It depends, but homeowner’s insurance should at least cover the replacement cost of the home in the event of a fire or other incident. It will usually cover important appliances and furniture as well. Some policies will cover temporary lodging while you figure out the next steps. But it’s important to go over those coverages with your insurance agent.
It also can cover liabilities and protects you if someone is injured on your property. Some policies will cover theft as well. So if your house is broken into and your prized (ridiculously expensive) mountain bike is stolen, your insurance policy may replace it! A lot of the coverages are up to you as a customer and how much you want to pay. And if you don’t like your insurance, you can usually change any time.
In short, homeowner’s insurance is like your safety net in the event that something were to happen to your home. It provides back up and the ability to protect your investment, so that you aren’t left without a roof over your head or the things that mean the most to you. But most importantly, remember that it’s primarily there to protect you and is worth investing in, even once your house is paid off.