The answer to the question “can I own a home without homeowners insurance” is yes. It is possible, but it is not recommended and if you have a mortgage payment, you can believe your lender will require you to get homeowners insurance.
Why Homeowners Insurance is Required by Mortgage Lenders
The reason the bank holding your mortgage requires you to have homeowners insurance is to protect themselves. They have paid for the home, so it is their home, in a sense, until you pay off the loan in full. The homeowners insurance is to protect the lender in case the home is totally destroyed and you have no way to pay off the balance of the loan or rebuild the home. You are still responsible for the loan, but if there is no collateral (the home is the collateral), the bank risks that you cannot repay the loan or that you will file for bankruptcy.
Homeowners Insurance Once You Pay Off Your Mortgage
Once you have paid for the home in full, you are then free to do as you wish when it comes to homeowners insurance. There are no state requirements for homeowners insurance, so once the home is yours free and clear, all decisions are completely on your shoulders. Of course, unless you feel fine about forking out the money for any damages to your home, or can afford to completely rebuild out of your own pocket, going without homeowners insurance is not a financially sound decision.
What Homeowners Insurance Gives You
Your home is probably your greatest personal, financial investment. There is a lot of money at stake in the structure of the property, the contents inside the home and other structures that may be on the property. A homeowners insurance policy can provide financial protection for the damage or total loss of these items. In addition, most homeowners insurance policies provide liability protection. If someone is hurt while on your property, you could be liable for their medical bills. If so, your homeowners insurance liability coverage will pay for them.
Homeowners Insurance Flexibility
One good thing about owing your home without a loan (besides the obvious) is that you are more free to choose your homeowners insurance policy. Lenders will have specific requirements for your home insurance policy and those requirements may or may not make sense to you. In some cases, they may require more coverage than you may actually need. Once you are in control, you can cut back on the coverage value for your home if need be. Keep your homeowners insurance coverage, but without your mortgage lender looking over your shoulder, you can take advantage of the flexibility.
Homeowners Insurance Can be Affordable
One thing you have in your favor when it comes to shopping for cheap homeowners insurance is that there is a lot of competition. You can use that fact to your advantage with comparison shopping. Comparison shopping is easily done online by gathering as many homeowners insurance quotes as you have time for. You can get multiple quotes in only a few minutes and they can help you spot differences of as much as several hundred dollars per year in the premiums. If you are afraid of the cost of homeowners insurance, get a few quotes to see just how affordable homeowners insurance can be.