The feeling of sending in your final mortgage payment can be amazing. For many property owners, this is one of the largest payments they make each month. Now that you do not have this debt, you may feel it is okay to stop purchasing home insurance. However, this can be a very big risk. Instead, work with your agent to make your policy a better fit. Here is why it matters.
Mortgages Require Comprehensive Home Insurance
When you have a loan on your home, the lender likely requires you to maintain a home insurance policy. The policy protects the home. If there is damage to the home, such as a fire, the payment from the home insurance for the fire could pay off the lender’s investment. They do not lose money. But, once you pay off the loan, this obligation is no longer present.
Why Canceling Is Not Good
Even with a loan no longer requiring your policy, there are countless benefits to it. The risks associated with your home remain the same. Here are a few key examples.
- Someone Breaks into the Home
When this happens, you can lose thousands of dollars’ of collectibles, electronics, and other valuables. You also have damage to repair. This can be expensive to overcome.
Without home insurance, a fire could destroy your financial health. If the fire is significant, it may mean you can to obtain a new loan to build a new home, if you lack coverage.
Perhaps you decide to add an extension onto your home, but a worker falls and suffers a significant injury. You could be liable for the losses here, too. Without liability insurance, these risks are your own to bear.
What You Should Do
Instead of allowing this to limit you, consider speaking to your insurance agent about your options. Talk about:
- Whether the amount of coverage you have is the right amount
- What risks are present
- What safety steps you can take to minimize risks
- What discounts and rewards you may qualify for
- How you can save by bundling your policies
The key here is not to overcome the value of home insurance. Now that you paid off the home, it is more valuable to you than ever before. You do not want to risk it.