Most people are aware that there are minimum levels of auto insurance required to drive a car in most states. These are referred to as “financial responsibility laws” and serve to protect the insured and other drivers. Actual laws and minimum levels of coverage can change from state to state, but coverage is mandatory to drive legally. There is no such law regulating home insurance, yet you may still be required to carry it.
Why? In part, unlike driving a vehicle, you are not putting anyone at risk by owning your own home. Well, except for your lender who is taking a risk by financing you. It is the lender who may require you carry home insurance.
When most people purchase a house, they finance it through a bank or a mortgage company. Homeowners who finance properties are frequently required to carry home insurance to protect the interests of the lender. The lender will not approve the loan if the borrower does not agree to purchase homeowners’ insurance. In fact, if there is a point somewhere along the road when a homeowner cancels or allows their home insurance to lapse, the lender can forcibly place home insurance on the property at the expense of the borrower. This insurance is usually much more expensive than what a homeowner can find on their own.
So, while home insurance is not a legal requirement, a mortgage company can mandate it to qualify for a home loan. This doesn’t mean you don’t have options, however. You still control who you decide to insure your home.
If you are struggling with money and bills, the last thing you want to do is get behind on mortgage payments or allow your home insurance to lapse for non-payment. You may, however, be able to find less expensive alternatives by contacting one of our independent home insurance agents. The reality is, the home insurance you have may not be your most affordable option. Contact us to get a no-obligation, free quote. We look forward to assisting you.