Every year, Illinois homeowners pay on average $1,000 per year to insure their homes – but, why? Often homeowners ask, “why am I paying my hard-earned money on insurance policy that I may never use?”
This blog post seeks to explain why home insurance is so important to financial protection and reinforce its place in your yearly budget.
1. You Probably Have to…
While this reason is probably the least satisfying of all – it is also likely the most persuasive. Home insurance is almost certainly required to satisfy loan or landlord requirements. In short, mortgage or rental contracts require that the borrower or renter purchase homeowner insurance.
For mortgage-purchased homes, the lenders require the insurance to protect the collateral that guarantees their loan. A property with an existing home has greater value than a parcel of land with rubble or simply a basement. The home insurance provides the best protection to rebuild a home – should unfortunate or unexpected events damage the home.
Additionally, while most mortgage agreements require the homeowner to purchase insurance – the same agreement also allows the lender to buy insurance on behalf of the homeowner should the homeowner fails to buy it for themselves. This is called force-placed insurance. This insurance is often very expensive and is not personalized for the homeowner – but simply to make sure the home is insured.
Similarly, a landlord, who rents their property, will often require the tenant to protect their own property and the liability incurred by occupying the apartment.
2. It’s Your Biggest Investment… Protect It!
For most people, their home is the biggest purchase they will ever make. We skrimp. Then save. We plan. And budget. All so we can own a place or our own. Its the backdrop for our memories and a source of pride. In total, the home is the greatest financial and emotional investment a person and family will ever make.
Home insurance is designed to provide protection for that emotional and financial investment.
So, whether you intend to sell your home to upgraded later – or intend to pass it along to your family later in life- home insurance allows you to protect that plan.
3. It’s not just for your house… it covers other stuff too!
Sure, Home insurance provides coverage for your home… but it also covers your fence, your sheds, your detached garage, your couch, your furniture, your computers, your jewelry… and the list goes on. In short, the various coverages provided in a home insurance policy provides loads of protection.
In addition to protecting your property, your home insurance policy also protects homeowners from certain claims and lawsuits stemming from the home – or certain actions. If a persona slips and falls on ice in your policy – your homeowner’s policy can provide protection. If the homeowner’s dog injures someone – a homeowner’s policy can cover legal expenses and the costs to resolve the claim. Or, let’s say the homeowner plays golf – and hits someone or their home with an errant shot – a homeowner’s policy can provide coverage.
A homeowner’s insurance policy is an essential tool to protect most people’s biggest and most important investment. Its robust and myriad coverages protect the long-term investment and risks inherent in property ownership. While some individuals feel compelled to purchase their policy to satisfy a landlord or lender’s requirements – the value of the insurance policy far exceeds the demands of others.