Is it Really Necessary to Purchase Homeowners' Insurance Coverage?

Purchasing homeowners' insurance coverage is just one more additional expense when you are purchasing a home, and after all those closing costs, points, and hidden fees and taxes, many first time home buyers wonder if it is really all that necessary to purchase homeowners' insurance coverage. Some states do require homeowners' insurance coverage as a matter of law in the same manner that most states require auto insurance. However, for those states that have no laws requiring homeowners' insurance coverage, the only mandate is determined by the lender. The lender wants to protect their interests and thus it is often written into the home loan agreement that the home buyer handle the purchase and maintenance of homeowners' insurance coverage.

There are states that do not require the purchase of homeowners' insurance coverage and should you purchase your home with cash instead of a loan, the technical answer would be that you do not have to carry homeowners' insurance coverage. That said, it is not wise to own a home in full or in part without adequately covering the potential loss. A home is most likely the most expensive item you will ever purchase, and thus it truly doesn't make much sense to save a few dollars now while placing everything you own including the home in jeopardy.

Homeowners' insurance coverage protects you from the loss of your property in multiple ways. Most home owners recognize that their homeowners' insurance coverage protects them from damage caused by nature's fury, including events such as hail and storm damage, vandal damage, and fire and lightening damage. However, good homeowners' insurance coverage covers more than that and also includes protection from damages caused by injuries that occur on your property. Random events such as a wayward tree branch that clunks your visiting neighbor on the head or your kid's bike that was left on the walkway ends up taking out the postal carrier can happen at the most unexpected moments. Should you not be adequately covered chances are that you will be liable for not only the medical bills, but any lost time and possibly even damaged awarded for pain and suffering, which can run rather high these days.

Adequate homeowners' insurance coverage usually requires additional coverage than the initial policy states. Most general policies cover some basic damages and possible medical expenses and wage loss, but often have such limited amounts that it doesn't protect you well enough. In order to be fully protected your homeowners' insurance coverage generally requires and upgraded policy and even possibly additional addendum coverage. Homeowners' insurance coverage is an essential part of owning a home, maintaining a home, and being responsible for protecting your own investment. Even if there is no mandate that requires the protection of homeowners' insurance, the risks associated with not having it are far too great to justify the savings.