There is no choice in this situation. If you do not renew your homeowner's insurance, the mortgage holder will instate its own policy, which will probably be significantly more expensive than your policy.
A home insurance guide will provide you with the information you need to have adequate coverage for your home.
As already discussed, when you carry a mortgage on your home, it is required that your homeowner's insurance protect the lender.
But what if you own your home outright and you choose to have no homeowner's insurance. You run the risk of suffering a total loss of what is more than likely your most significant financial asset. If your home is destroyed in an earthquake, hurricane, or fire, you will be left to deal with the complete loss of an investment worth hundreds of thousands of dollars in most cases. And you may be left homeless.
Any buying guide for homeowner's insurance will warn against not having proper coverage.
What would happen in the event someone slips and falls on your property and is injured? You will be left liable for the injured party's medical bills. A clause for liability coverage in your homeowner's insurance policy will cover this potentiality. Without this coverage, you could be liable for millions, orat least thousands, of dollars in medical bills and damages resulting from this incident.
The best homeowner's insurance guide will advise you to remain insured as protection against theft. Your policy will cover the contents of your home,such as jewelry, electronics, valuable silver or china pieces, any of your personal possessions. If you are mortgage-free and do not have a homeowner's insurance policy, anything stolen during a burglary will need to be written off. If you have repair issues due to the burglary, you will be responsible for those repairs.
The best homeowners insurance guide will caution you that there are financial consequences for allowing your homeowner's policy to lapse and then attempting to purchase the coverage later. Most insurers will be suspicious of a homeowner who drops coverage and then tries to get re insured. If you are allowed a policy, it may be at a much higher premium than you previously paid, as you will be viewed as a greater risk. Not carrying homeowner's insurance can be a red flag with the credit bureaus and may affect your credit score.
Let's explore the options of not having homeowner's insurance from the complete guideto home insurance viewpoint.
There are no laws requiring homeowner's insurance as there are with automobile insurance. If you drive without car insurance and are caught, a violation of criminal law occurs. There is no criminal penalty awaiting a homeowner without insurance. The risk is a private one.
Loan documents, a mortgage or deed of trust on a home, contain legal jargon that spells out a borrower's obligation to maintain homeowner's insurance. Failure to maintain the insurance will allow the lender to foreclosure on the property.But first, the mortgage holder will purchase a policy and have the homeowner billed for it. Then non payment of the premium will result in foreclosure. It is good to note that the lender's policy will only cover the mortgage and the home. The homeowner's personal property is not insured.
And remember, it will be more expensive if the lender purchases the insurance. Itis much cheaper if the homeowner maintains his own policy.
A catastrophic result of no homeowner's insurance can happen in the event of storms, tornadoes, hurricanes, earthquakes, or any horrific weather occurrence.Your home can be left with costly repairs and could be rendered unsafe. Relocation for many months can sometimes result. If the homeowner does not have proper insurance coverage, he bears the liability himself.
Any homeowner can face the possibility of a lawsuit. The family dog bites a neighbor or visitor, or someone slips and falls on your front steps. Either one of these occurrences is cause for legal action. Not every claim is settled quickly. What if the visitor or neighbor sues and an uninsured homeowner has to hire an attorney. As legal fees are typically paid first, the cost of a trial can quickly eliminate your savings. This is where the homeowner's insurance is useful. The insurance company retains the attorney and pays all the fees. One serious personal injury could easily bankrupt a homeowner, thereby makingliability coverage essential.