The thought of taking house insurance must have crossed your mind when you were buying a new house or while paying the mortgage. A home is one of the most valuable and precious assets anyone has. House insurance helps protect this investment you made, hence protecting you from any mishaps. But do you legally need to have house insurance? Here we have spoken everything you need to know to help you understand the answer to the above question.
Is home insurance compulsory?
Everyone dreams about buying their own house. Wealthy people can afford to pay for their desired house in one go. But the strugglers need to rely on house loans offered by the banks. With the help of some paperwork and a decent credit score, anyone can get a home loan for their dream house. There are times where some banks force their customers to take Home Insurance with a home loan. They might even tell you that having home insurance is a legal need when you want to go forward with a house loan facility.
The truth is that it is not mandatory to buy home insurance. It is fully legal to purchase a home with no insurance. Banks tend to say that it is a legal requirement to safeguard their self-interest by chance you fail to pay them the loan back. In addition to that, they are forcing you to buy home insurance from an insurance company they have ties with. If you do buy home insurance, they might earn a high commission. Ethically, forcing a customer to buy home insurance to get a home loan is wrong. However, a bank can change its internal guidelines regarding the requirements of a home loan. They can make it compulsory to have home insurance, but they need to provide the customer with the freedom to choose their home insurance policy.
Where is home insurance required?
There are some cases where you will need to have home insurance. For instance, for a mortgage, your lender mostly wants you to have home insurance stating the Insurance Information Institute (III) before they fund your mortgage. This proof is required so that the lender makes sure that the financial investment they are making in your house is protected from any damage or mishap. Other than home insurance, there is additional insurance you might need as proof for many of the mortgage companies. According to the Consumer Financial Protection Bureau, if you do not have any home insurance, your lender can purchase and charge you. Note that the lender’s bought insurance can be costly. Hence it is recommended to buy your home insurance on your own to ensure that it is affordable.
Why do you need home insurance?
Usually, standard home insurance helps you protect your house by covering more than the physical structure of your house. It can help you protect all the medical bills if someone gets injured on your property and safeguards your personal belongings in your house. Here are some of the coverage your home insurance should include:
- Personal property coverage: This coverage helps you pay for replacing certain belongings that get stolen or damaged if the loss is covered.
- Dwelling coverage: If a covered loss damages any attached structure like a garage, patio, or deck, then you can pay for the repair using this coverage.
- Other Structures coverage: In this coverage, additional structures like your shed or fence are insured for.
- Liability coverage: This coverage helps you pay any repair cost, medical bills, or legal fee if you or any of your family members are held legally responsible for accidentally damaging someone’s property or injuring someone.
- Medical coverage for the guest: It covers the medical bills if someone is injured on your property
- Additional expenses coverage: This covers the temporary living cost till your property’s damage is repaired.
Now, you know that you legally do not need to have home insurance for your property. But for home loans from the bank or as proof to show your lender or mortgage companies, you must have home insurance stating the Insurance Information Institute (III). Ensure you do your research and purchase home insurance which is affordable and offers coverage in multiple sections. You can get in touch with Oyer Insurance Agency to help you get home insurance. Oyer Insurance Agency has the experience to assist you in making the most of your insurance while saving you time and money. If you live in Ohio, you can contact Marlin or Trent for a quote.