Laws have long required you to buy car insurance. Laws now also require you to buy health insurance. Given this, you probably find yourself asking the question, “Do I really need home insurance too?”
If you have a mortgage on your home, the answer to that question is “yes.” The reason for this is that your lender wants to make sure the money is available to repair the home if anything happens. Otherwise, the lender could end up with a loan on the home that is greater than the value of the damaged home. Therefore, to protect the value of the home, mortgage lenders require owners to have home insurance.
I Don’t Need Home Insurance Because I Can Fix The Home Myself
Your mortgage lender doesn’t care if you can fix the home yourself. They want to make sure they can get the home repaired and sold, if they need to. Your ability to fix or repair the home yourself is of no consequence to the lender.
My Bank Bought Home Insurance For Me
Banks have relationships with insurance companies and will buy insurance for you if you let the insurance lapse. This is called force-placed or lender-placed insurance. Force-placed insurance is expensive. Very expensive. It is not advisable to take this route to get home insurance.
Even if you have insurance, your bank might purchase force-placed insurance on your behalf. This could happen if you don’t provide them proof of insurance. This could also happen if you have insurance, but you don’t have enough to cover the replacement of the home in the event of a total loss.
Check to Make Sure You’re Getting a Fair Price
Always check the price of insurance before agreeing to buy. Click here to go to a U.S. map where you can find the average price of insurance in your state.
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