One question that often comes up in the mind of a homeowner is that whether Homeowners Insurance is mandatory, or can one avoid it.
Yes, there are situations when Homeowners Insurance is mandatory; yet even in situations where it is not mandatory, it is always advisable to take Homeowners Insurance for the benefits it gives to a homeowner.
Situations where Homeowners Insurance is mandatory:
First, let us look at the situations when Home Insurance is mandatory. Whenever a person buys a house or real estate, it is generally through a mortgage with the bank.
The lender bank would like their investments made in the house on your behalf, to be safe and secure. In case of any calamities or destruction to the house, the banks will incur a heavy loss.
The lender needs to be protected against such losses. This is where Insurance companies step in. They extend financial protection to the mortgagor bank to cover the loss in case of many mishaps. This is the reason it has been made mandatory to go in for Homeowners Insurance whenever a person is financed for buying a house.
In case the homeowner does not provide home insurance cover to his mortgaged property, the banks will buy home insurance on his behalf and charge it to his account.
This insurance may cost much higher than what the homeowner could have paid by choosing and negotiating with insurance companies. So it makes better sense to get the insurance done by you.
Situations where Homeowners insurance is advisable even if not mandatory:
In cases where the mortgage has been paid off, people tend to think they might save some money by not going in for home insurance. This is a very erroneous thinking because home is the most expensive and vital of all assets one can have.
In case of any mishaps, it would not only render a person homeless, but it would be very difficult to buy another house once again. Insurance is a small price to pay for the peace of mind and safety. What is more, the homeowner also enjoys the liberty of being free from any legal liabilities that are related to the house.
For example, a home insurance also covers damages or personal injuries caused to neighbors, guests or visitors to the house. Even if a pet in the house injures a passerby, or a theft takes place; home insurance can take care of such eventualities.