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The Benefits of Homeowners Insurance
When you choose to forgo buying homeowners insurance, you assume the risks associated with potential damage to your house. The cost of repairing damage and replacing your home falls entirely on you in the event of a disaster. If you’re well off, this might not seem like a big deal, but most people aren’t in a situation where this option is realistic.
Many people forget homeowners insurance protects you against more than just damage to your home. It also covers your possessions and protects you against liabilities. If your house burns down, a self-insured homeowner is responsible for not just rebuilding the home but replacing the contents within it, too. But if you have homeowners insurance, it will help cover these costs. Make sure your also covered for other property damage, as well as natural disasters. Also make sure you understand your coverage limits, and consider having excess coverage than just the minimum protection.
In the event of a flood or tornado, your house might not be destroyed entirely. You could end up being responsible for having it demolished on top of being rebuilt, which will be an added expense.
Pocketing extra money instead of paying a premium to an insurer sounds like a great idea in theory, but it doesn’t always work out in the long run. The cost of your monthly premiums over the years could end up being less than what you’ll pay for rebuilding your home on your own.
Remember, the value and cost of your home won’t remain the same over time. Inflation could cause the value of your property to skyrocket shortly after buying your home, meaning if your house were destroyed, it’d cost you more money to rebuild it than you originally paid.
Self-insuring a home is a risky endeavor and could lead to serious problems should your home become damaged or destroyed.