THURSDAY, OCTOBER 29, 2020
As a rule, home insurance is not required by any state or federal law in the U.S. There are times where you will need to carry insurance for other reasons, however.
If you have a loan or mortgage on your home, a lender will require you to carry home insurance. The amount they require varies. Generally, you will be required to carry enough home insurance to cover your home’s mortgage. You must carry this insurance until you pay off your mortgage, though higher limits are also available and often recommended.
Other Home Insurance Requirements
If you live in certain areas, you may be required to carry certain types of insurance. An example would be if you live in an area that has frequent earthquakes or floods. If you live in a hotspot for either of these dangers, you may be required to carry extra flood or earthquake insurance. This is because floods and earthquakes are frequently excluded from basic home insurance policies and require additional protection, also called policy floaters.
Do I Need Home Insurance?
Even if you are not required to carry home insurance, such as if you paid off your home’s mortgage and do not live in a high-risk area, it is still smart to carry a certain amount of home insurance. Without it, you could face making repairs to your home or even entirely rebuilding after a storm or other disaster. A comprehensive home insurance policy can offer compensation for damages to your home and personal belongings caused by fire, wind, hail, lightning, falling objects, theft, vandalism and more.
Not only does home insurance cover physical damage, but it can cover liability issues, as well. Liability insurance under home insurance provides compensation in case someone else suffers bodily injury or property damage on your home’s property. This can also extend to injuries that can be caused by your children or pets. If your dog bites a visitor, for example, liability insurance can cover the victim’s medical bills and protect you from a possible lawsuit regarding the injury.
In general, it is recommended that you carry at least 80% of your home’s total replacement cost value in home insurance. Carrying less than that can leave gaps in your coverage when it comes time to file a claim. Be sure to speak with your insurance agent about how much coverage your home needs, whether the home is paid off or not.
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