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  • Alexander Wissel

Don't Risk It! Find Out Why Home Insurance Is Essential

Must-Have Protection For Homeowners

  1. The article explains what home insurance is and why it is essential for homeowners.

  2. Home insurance provides coverage for the physical structure of your home, personal belongings, liability, and additional living expenses.

  3. Home insurance is often required by mortgage lenders to protect their investment in your home.

Home Insurance is Essential for Homeowners - Source: Pexels.com
Home Insurance is Essential for Homeowners

Your home is more than just a roof over your head; it’s a place filled with some of your most valuable things and people. And for many Americans, your home is the most valuable investment you’ll ever make. It’s why you need to protect it.


Home insurance is a vital part of responsible homeownership as it offers financial protection for your home's structure, personal belongings, liability, and additional living expenses. It ensures that you are covered in case of unexpected events such as accidents, disasters, or injuries on your property. Home insurance is not only crucial for safeguarding your home but also often required by mortgage lenders to protect their investment. However, it is important to use insurance for significant events rather than making frequent claims for minor damages to avoid policy cancellations and higher premiums.


I sold homeowners insurance for almost 8 years. It's one of the things you buy that you hope to never have to use. In this article, we will explore what home insurance is and why it is essential.


Understanding Home Insurance


At it’s driest, home insurance is a contractual agreement between a homeowner and an insurance provider. These providers can be corporations, mutual insurers or associations set up for the purpose to protect members.


Insurance provides financial protection against potential risks that may affect your home and its contents. By paying regular premiums (another way to say the cost or bill), you can have coverage in the event of unexpected accidents or disasters.


The core principle of insurance is the transfer of risk. You pay roughly $1,500 – the average cost of a home policy in the U.S. – to ‘someone’ who takes on the risk of rebuilding your home in the event of an accident.


Protection for Your Home's Structure

One of the biggest reason home insurance exists is to protect the physical structure of your home from perils. Perils are another way of say different types of accidents or damages.


It provides coverage for damages caused by fire, lightning, windstorms, hail, and more. In the unfortunate event of such incidents, your insurance policy will help cover the cost of repairs or rebuilding, ensuring that your home can be restored to its former glory.

Understand the purpose of an insurance policy is to get you back to the same ‘position’ financially as you were in before the accident. So don’t get ideas about rebuilding a mansion when you started with a rancher. That’s called insurance fraud.

Coverage for Personal Belongings


Your home is filled with personal belongings that hold both practical and sentimental value. While insurance doesn’t replace the sentimental, it can replace the physical.


Home insurance offers coverage for your personal possessions like furniture, appliances, electronics, clothing, and even jewelry. If these items are damaged, stolen, or destroyed due to covered perils, your insurance policy will help reimburse you for their value, allowing you to replace them with new ones.


Liability Protection


Accidents can happen at any time, and as a homeowner, you may be held responsible for injuries sustained by others on your property. Home insurance includes liability coverage, which safeguards you in such situations.


If someone is injured on your property and files a lawsuit against you, your insurance policy will cover legal expenses, medical bills, and potential damages, providing you with the necessary protection and financial security.


You never know when this might happen. I’ve seen a case where a trusted older friend over at a house slips on a step, shattering their leg. The friend sues the homeowner because the step wasn’t clear… homeowners insurance paid the medical bills that were over $15,000. It happens more than you realize.

Additional Living Expenses

In the event that your home becomes temporarily uninhabitable due to a covered peril, home insurance offers additional living expenses coverage. This coverage helps cover the cost of alternative accommodations, meals, and other necessary expenses while your home is being repaired or rebuilt.


Mortgage Requirements


For many homeowners, having home insurance is not just a choice; it is often a requirement by mortgage lenders. Lenders want to ensure that their investment is protected, so they typically mandate borrowers to maintain adequate home insurance coverage. This also includes flood insurance in certain coastal areas.


The Purpose Isn’t To Use It Often


You should know that homeowners policies are written in broad language that covers a lot of things on your house. This is not an opportunity to send every small damage event in to your homeowners insurance to get a check for the repair costs. Your policy is for bigger catastrophic events. I’ll say it again. Big. Catastrophic. Events.


Unfortunately, there are individuals who believe that they ‘deserve’ to get their money back from the insurance company… They will put lots of claims in for small things– hail, storm damage, wind, etc. These claims generally don’t exceed $5,000-$10,000.

The problem is two-fold. If you have too many claims in a period of time, you policy can be cancelled by way of not being renewed. If you have to go get insurance on a property that has lots of claims, you might find that you and the property are uninsurable.


That means that the only places which will insure you are going to charge you an arm-and-a-leg. Think about paying $5,000-$8,000 in premiums instead of $1,500. It’s because the person and the home have shown themselves to be a bad risk. Insurance companies aren’t required to insure those.


We know of a situation where a homeowner lost their dream home because of it. A woman who was buying a new home didn’t realize that her 5 insurance claims in the past 3 years would prevent her from buying a house. When she went to get insurance on the new home, she discovered she was uninsurable. The numbers were tight, with her income and expenses. The cost to buy insurance was so costly that she couldn’t get approved for a mortgage.


Her shortsighted desire to squeeze her insurance company cost her a dream home. Don’t be that woman. An average homeowner has 1 insurance claim in the past 7 to 10 years.


Homeowners Insurance Protects You


Home insurance is an essential component of responsible homeownership. It provides financial protection for your home's structure, personal belongings, liability, and additional living expenses.


By having comprehensive home insurance coverage, you can reduce the financial impact of unexpected events. Take the time to assess your insurance needs, compare policies from reputable insurers, and choose a policy that suits your requirements. Your home deserves the utmost care, and home insurance is the key to ensuring its safety and your financial well-being.

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