The article concerns the following question – Is home insurance mandatory? If you have recently bought a home, or are considering it, you need to know a few things about home insurance. It is required by most, if not all, mortgage lenders to protect the property being mortgaged. In most cases, the lender will require that you buy a home insurance policy that’s the same amount as the mortgage. Your home is the single biggest investment you’ll ever make, so you will want to make sure your home insurance protects your investment as well as it does your lender’s. To protect yourself adequately, your home insurance should cover:
*The structure itself. You need to have enough home insurance to completely rebuild your house if it is destroyed by fire or another cause. To find the cost to rebuild your home, ask a builder or local realtor for per-square-foot building costs, then multiply by the square footage of your home. That number will be the amount of home insurance you need. Keep in mind that earthquakes and floods aren’t covered by standard home insurance policies- if you live near or in an earthquake or flood zone, you will need a separate policy.
*Personal belongings. Most home insurance policies cover your possessions from fifty to seventy percent of the policy amount. To figure if this amount is enough, inventory all of your possessions- your appliances, furniture, clothing, electronics, jewelry, collectibles, etc. and have them appraised if needed. Add that up, and that’s the coverage amount you need. Ask your agent if you need additional coverage.
*Liability coverage. This protects you from being sued if someone hurts themselves or damages their property when you or a family member is responsible. Liability coverage pays your legal expenses, and most policies offer $100,000 in liability cover. If you need more, or have a lot of assets to protect, you can always buy additional coverage.
*Additional living expense. This cover reimburses you for living expenses when you need to move because of a natural disaster or fire. It can pay for hotels, food and other expenses while your home is repaired or rebuilt. Most policies offer coverage up to 20% of your policy value, and you can increase your level of cover if you need it.
Home insurance is not required by law, but if you have a mortgage, then you will most likely need to have it. If you already own your home, the law does not require that you have the coverage, but it’s still a good idea unless you have enough money to replace the home if it is lost.