5 Reasons You Need a Good Homeowners Insurance Policy

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Having the right homeowners insurance is crucial for every property owner. Keep reading to learn why. 

Every property owner needs a good homeowners insurance policy. While paying the premiums for comprehensive coverage out of a checking account may not be fun, it’s absolutely necessary to put the right protections in place.

Here are five reasons why buying good insurance for your home is so important.

1.Property owners could be sued

Many accidents happen in private homes. In fact, 175,000 preventable injury-related deaths occurred in homes and communities in 2021. That’s 78% of all preventable deaths due to injury over the course of that year.

When accidents happen at private homes, property owners can be sued. They can be made to pay for medical bills, lost wages, pain and suffering, emotional distress, and wrongful death damages to surviving loved ones. The costs can be astronomical.

Liability insurance can pay for these costs up to policy limits. Without a liability policy as part of home insurance coverage, though, homeowners could be personally sued and financially devastated.

2. Rebuilding a house can be really expensive

It costs around $100 to $200 per square foot to construct a new house, according to data collected by Quicken. If a home is destroyed, the owner would need to pay to rebuild it out of pocket if they didn’t have homeowners insurance.

Since mortgage lenders have a vested interest in houses, lenders actually require insurance to make sure that their loan collateral can be rebuilt.

Homeowners without insurance would need to cover the costs of repairs or rebuilding their home personally with no help. If a homeowner with a mortgage somehow managed to go without insurance (which would be difficult, since lenders buy force-placed coverage if a homeowner lets a policy lapse), the owner would still be responsible for paying their home loan off too — even if the house was destroyed.

3. Most people own thousands of dollars’ worth of stuff

Most people keep their stuff at home. And those personal belongings are expensive. Allstate has a tool property owners can use to estimate how much their possessions are worth based on how much they own. Typically, even someone with the bare minimum of furniture and belongings owns tens of thousands of dollars’ worth of stuff.

Without home insurance, a property owner would have to pay personally to replace everything they have in their house.

4. Finding alternative housing can be expensive

If a house is damaged badly or destroyed, a homeowner will still need a place to live. The average cost of a hotel is $171 per night in the U.S., while the price of alternative rental housing can vary depending on property type.

It can be expensive to pay these added costs, especially as mortgage payments are still typically due as the home is rebuilt or repaired. A good home insurance policy will cover additional living expenses resulting from a covered cause.

5. Dealing with an insurance claim can be stressful

Finally, facing a disaster at home can be really stressful — especially if an insurer doesn’t pay promptly or doesn’t offer fair compensation. This is why it’s so important not just to buy homeowners insurance, but to buy good insurance from a trusted company.

Reviewing J.D. Power customer satisfaction surveys and the complaints database maintained by the National Association of Insurance Commissioners can help property owners find an insurer that will take care of them.

All of these are very good reasons why getting covered is so essential. Property owners should begin looking for the right insurance today if they aren’t confident they have the coverage they need.

Our picks for best homeowners insurance companies

There are many homeowners insurance companies to choose from. We’ve researched dozens of options and short-listed our favorites here. Looking for a green build discount or easy bundle policies? Want an easy-to-use interface? Read our free expert review and get a quote today.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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