Yahoo Finance 4 Reasons You Definitely Need Homeowners Insurance — Even If Your Policy Just Got More Expensive
The increasing number of Americans dropping their homeowners insurance has been a popular headline lately. The biggest reason for this trend is homeowners insurance is now more expensive than ever. According to a 2023 report from PolicyGenius, rates increased by roughly 21% between May 2022 and May 2023. And homeowners are expected to see an additional 6% increase in rates this year, per the National Association of Realtors. Because of this, many homeowners are opting out of their insurance plans entirely and instead choosing to pay off their mortgages — which often require homeowners insurance — early.
The Washington Post also reported on this trend, saying that the rise in homeowners insurance costs is driven by two things: the growing effects of climate change and increasing housing costs. Therefore, more Americans are choosing to forgo their homeowners insurance and put themselves at risk to save their finances.
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However, despite the skyrocketing costs, financial experts say it is still important for homeowners to keep their insurance, as several risks come with not having it. Here are several reasons it’s important to keep your homeowners insurance despite the increasing costs.
Severe Weather
One of the biggest benefits of homeowners insurance is that it protects your home from extreme weather damage. If you live in an area where events like fire, lightning, hail or strong winds are common, you may greatly benefit from homeowners insurance. Also, while it’s not typically included with standard home insurance, flood coverage can also be purchased in a separate plan.
“Homeowners insurance covers your home and belongings if damaged or lost due to a covered disaster,” said Tori Addison, editor for MarketWatch Guides.
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Property Damage
Not only does homeowners insurance cover damage from severe weather, but it also protects your home from unexpected property damage.
“A standard HO-3 policy also covers fire and smoke damage, theft and vandalism, and water damage that’s caused by burst pipes,” said Cassie Sheets, data journalist for Insurify. “It offers some peace of mind that you won’t have to cover a huge, unexpected expense that makes it difficult to pay your mortgage.”
Additionally, homeowners insurance doesn’t just protect a home itself. It also protects the belongings inside the home.
“Homeowners insurance extends coverage to personal belongings inside the home, including furniture, electronics and clothing,” said Rajni Kapur, CEO of All Solutions Insurance. “This ensures reimbursement for losses due to covered events, offering crucial financial support.”
Liability Coverage
Liability coverage is another great and crucial benefit provided by homeowners insurance, covering medical bills if a person gets hurt on your property.
“It shields homeowners from financial liability if someone is injured on their property or if unintentional damage occurs to another person’s property,” Kapur said.
A Mortgage Usually Requires It
A fourth and final reason that you need homeowners insurance is this: If you have a mortgage or an obligation to a financial institution, you are most likely required to have some form of homeowners insurance. It’s important to work with said financial institution to find insurance options that it will allow, such as policies with a large deductible.
“That said, you need to make sure your home is insured to value, that you are comfortable with the deductible and your insurance as a whole is built to protect all of your concerns,” said Christopher Giuditta, vice president and senior advisor at World Insurance Associates. “While self-insurance can help homeowners in some ways, you really need to speak to a professional to understand what areas of coverage are appropriate to self-insure, or else you may be risking too much for too little.”
How To Save Money on Homeowners Insurance
While there are several reasons it’s important for homeowners to have insurance, the high price tag that comes with the insurance causes many consumers to hesitate. Fortunately, people can reduce the cost of their homeowners insurance in several ways.
“The first is to compare rates with several companies,” Sheets said. “Some insurance markets, like Florida, may have fewer options, but homeowners can often save hundreds on annual premiums by switching to a new company. Certain renovations, like installing hurricane shutters or home security systems, can qualify policyholders for discounted rates. If you know you can afford to pay a little more out-of-pocket in case of an emergency, raising your deductible can also reduce your expenses.”
Additionally, it’s important to consider more than just the cost of homeowners insurance when deciding the value of coverage.
“In [MarketWatch Guides’] 2023 survey of 1,000 homeowners nationwide, cost was a key consideration for 41% of shoppers, but coverage was the most important factor at 44%,” Addison said. “Finding the lowest price was only the deciding factor for 15% of those shopping for homeowners insurance. These findings highlight the benefits of having homeowners insurance and the peace of mind it can provide despite the cost.”
Essentially, despite the high price of homeowners insurance, Americans who own a home should consider the many benefits that come with it, including the safety, protection and stress relief that it provides.
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This article originally appeared on GOBankingRates.com: 4 Reasons You Definitely Need Homeowners Insurance — Even If Your Policy Just Got More Expensive
