When you’re used to renting, finally owning your own home can be like realizing a dream. You no longer have to answer to a landlord or worry about neighbors overhead or underfoot. You can have a space that is entirely your own to enjoy with your
However, that does mean that you have to take care of your new home. Don’t expect a landlord to foot the bill if a natural disaster strikes or natural wear and tear starts to show in your home. You get to pay for that stuff now!
But since you’re the one paying, you can also be the one to choose how to protect your home from damage. The best way to do this is to invest in homeowners’ insurance.
Why Should You Buy Homeowners’ Insurance?
You may have some questions about homeowners’ insurance as you’re shopping around. You may wonder how much insurance you need, what it should cover, and how much it should cost. But more than anything, you want to know why you should buy it.
Your Home is an Investment
When you make a significant investment in property, like a home, you want to protect your investment. If it’s taken care of, your home will most likely increase in value over time.
There are some exceptions, like during a recession or if you choose a community where the local industry is dying (like the sad example of Detroit). But if you make a smart location choice, your property value is a long-term investment that will pay out.
You should invest in homeowners’ insurance to protect your investment in the future. You can have financial security for years to come in a comfortable home.
Your Lender Requires Insurance
Your lender also has a financial stake in your home. Whether you borrow from a bank or a mortgage company, lenders will make sure you provide proof of home insurance. The company needs to ensure that if you default on your loan, the home is still as valuable for sale as it was the day you bought it.
If you don’t choose a policy before your lender’s deadline, they can cancel the loan or purchase insurance for you. You will have to live with the policy they choose and perhaps make costly monthly insurance payments on top of your mortgage payments.
To make sure that your insurance policy meets your needs (and fits your budget), be sure to choose one before your lender’s deadline.
You Can Sleep Easier
With a safety net, you can have peace of mind. Homeowners’ insurance protects your financial situation. You’ll feel a lot better about losing valuable items in a theft or fire when you know the items will be compensated and you’ll still have the means to provide for your family.
Homeowners’ Insurance Covers More than You Think
You aren’t just protected against disasters like fire with your insurance policy. Most homeowners’ insurance plans also cover theft, vandalism, and destruction of your belongings inside the house. If you had renters’ insurance, you know how valuable it can be.
So if a disaster does strike, rest easy knowing your expensive possessions are also taken care of. If a thief breaks into your home and steals some of your possessions or another disaster occurs, you can file a claim with your insurance company to be compensated.
What Exactly Does Homeowners’ Insurance Cover?
Like we said above, homeowners’ insurance covers damage to your home and the possessions inside your home. However, you may have to add insurance for specific natural disasters.
It would be beneficial to investigate the necessity for insurance against natural disasters common to your area. You can get insurance for floods, earthquakes, windstorms, hurricanes, and tornadoes. You should determine which natural disasters are most at risk at your location to decide which policy to purchase.
For example, in Utah, there are a number of earthquake fault lines throughout the state. Homes that are positioned near to or on those fault lines would benefit from the peace of mind earthquake insurance provides.
How Much Does Homeowners’ Insurance Cost?
The cost of your insurance policy will depend on varying factors: the size of your home, the type of policy you purchase, and the deductible you will pay when you file a claim. The average annual premium is about $900, according to data from 2010 (the most recent year data was available).
Your premium also depends on your chosen deductible. Most insurance companies accept a deductible as low as $500, and most homeowners choose an amount between $500 and $1000.
So, Should You Buy Homeowner’s Insurance?
The short answer is yes, for most people. Since you make a major investment in your home, you should protect your investment. Also, if you have to take out a mortgage to pay for the home, your lender will likely require an insurance policy. When and if you make all the mortgage payments for your home, keeping the insurance policy will be your choice-but it’s a choice worth making.