You don’t have to have a homeowner’s insurance policy in order to own a home. In fact most of the older homes do not have any insurance at all. This is not a good practice, but when you are building or buying a home without having to borrow money, no one will force you to have insurance. When you purchase a condominium, for example, the walls are insured under the owner’s insurance policy. If it doesn’t matter whether or not you lose the personal contents and you do not have a mortgage, you do not have to have a homeowner’s policy.
When you take out a mortgage to build or purchase a home, the lender required proof that you do have an insurance policy in place. The final mortgage papers cannot go through unless you can present proof of the insurance and a copy of the policy is placed in your file. The lender will also require that his name be listed on the policy. In the event that the home is totally destroyed by one of the perils listed on the insurance policy, the payment check will made out jointly to you and the lender. The check cannot be cashed without the two signatures, because it is intended to pay off what you owe on the mortgage. If you rent and do not own a home, you can have a policy that covers the contents of the home or apartment. In the event of a disaster, the insurance policy will pay you for the items that have been destroyed or damaged.
There are no town or city by-laws that require homeowners to have insurance. Most do take it upon themselves to take out policies for their own protection and peace of mind. A lot of people think that having insurance is expensive and they cannot afford it. A typical policy costs about $400 or $500 per year and you can pay it off monthly if you wish. If you choose to have monthly payments of the premiums, a small finance charge will be added to the total. Most policies are for one year terms. If you think that you are paying too much, you can search for other companies who may be able to give you higher coverage for the same or lesser cost.
It is relatively easy to get homeowner’s insurance with the large numbers of insurance companies available. A look through the yellow pages of the telephone directory will give you an example of offices where you can sit and talk with an insurance agent about your needs. There are many insurance companies that have an online presence as well. Whether you choose online or offline companies, you should request a free quote from each of them based on the coverage that you decide you need. Then you can compare the quotes and choose the one that is best for you.
In order to determine how much coverage you need with an insurance policy for your home, you have to decide how much money you would need to replace your home as it is at the present time. The best policy to choose is replacement cost, as this will give you the money you need based on today’s market prices, not the market prices that existed when you built or purchased the home. Then you have to take an inventory of everything you have in the home in order to make sure you would get enough money to replace your furniture, appliances and clothing. This is not a difficult task and is much better than choosing an amount that will not be enough for you to replace everything if it is all destroyed.
Not having insurance is dangerous. So many things can happen to destroy part or all of you home that you could be left homeless and penniless if an accident should occur. Even if someone slips and falls on your property, you will be responsible for the hospital and other medical bills and they may sue for other damages. A home insurance policy will help pay for all these events, leaving your finances intact.
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