The quick answer to the question, is homeowners insurance required, is no. There are no state or federal laws that require you to purchase any amount of homeowners insurance. However, if you do not own your home outright, (no mortgage, no liens) then you can be sure that the bank holding the note on your home will require some level of coverage. So, if you are just purchasing a home, the bank will be in touch and require you to purchase homeowners insurance.
If you are about to purchase your first home, you should be aware that you will most likely be required to have your homeowners insurance in place before the bank will approve your home loan. As you are going through the process of a home purchase, you will need to choose a lender. Once you have chosen the lender, you can get in touch with them to learn what exactly they require for coverage.
The Required Amount
The amount of coverage that will be required by your lender will usually focus on the dwelling and any of the other structures on the property. Most policies will come with a level of liability coverage and your lender may or may not require a specific amount of liability coverage. Normally, the lender will require that you carry what is called replacement coverage for the dwelling, which means enough homeowners insurance to pay for the complete rebuilding of the home. In many cases, they may also require that you carry at least 10 percent of the replacement value of the home to cover other structures on the property.
Key Policy Elements
Other common homeowners insurance policy coverage elements is insurance for the contents of the home, coverage for scheduled property items (expensive items such as jewelry and expensive collections), and extra liability coverage for things such as swimming pools, trampolines and certain breeds of dogs. You can also get coverage for loss of use for the home, which will pay for hotel stays and even meals while your home is unavailable. There are also a number of riders to add to the policy which will add to your coverage, such as identity theft protection.
Tailoring Your Policy
There are many options when it comes to homeowners insurance. You don’t have to stick with just the requirements of your lender. You can increase limits if you like and you can add what are known as policy riders to increase your coverage to levels you are comfortable with. While the lenders require coverage for their benefit, the policy is really for your benefit and so you should get the coverage you feel is necessary.
Don’t Forget Quotes Can Save You Money
You can choose any homeowners insurance company you wish, so you should take advantage of the options you have. Rates vary quite a bit from company to company, so getting a few quotes online can allow you to quickly separate rates too expensive from those that are just what you are looking for. If you want a way to save hundreds of dollars per year in only 15 minutes, then take the time to get a few homeowners insurance quotes.