What are the Risks of Cutting Back on Homeowners Insurance?
Money is a factor with everything you buy. After all, you can only pay for something with money you have, or put it on credit, which eventually will have to be paid. Therefore, when the time comes to buy a new homeowners insurance policy, you need to factor in the cost of premiums before enrolling. However, cost shouldn’t be everything. It is equally important to factor in the quality of the plan. Saving money on homeowners insurance is great, but if you cut back on your insurance to save a few bucks, these are your risks:
Massive Expenses Following a Flood
One of the most common ways home owners cut back on insurance is by eliminating coverage for flooding. The reason they do this is because many don’t feel they are at risk. Sure, if you live near a river or in a city with heavy rainfall, you are more likely to experience flooding than a dry city. But even if you do live in a dry city, you still need coverage against flooding. You never know for sure your house isn’t at risk for flood damage. It’s best to be prepared just in case because, if your home is damaged from a flood, you may be on the hook for thousands of dollars in repair costs.
Cutting Back May not Satisfy the Lender
When you obtain a home loan, you will be required to purchase homeowners insurance. However, just any insurance plan won’t suffice. The lender will require a certain amount of coverage. This is the bank’s way of protecting itself against home owner’s ditching out on paying the loan if their house is damaged to a point where they can no longer live in it anymore. By forcing buyers to obtain a reasonable amount of insurance, the bank won’t have to worry much about them ditching out on paying off the loan because the insurance company will cover the major damages.
Cutting Back May not Satisfy the City
Each city has a code home owners must follow. Your home must be in reasonable, safe shape. Also, you must carry sufficient homeowners insurance. If you don’t, you could face stiff penalties, including fines that will cost you far more than getting a quality homeowners insurance policy.
As mentioned above, cost is always going to be a factor when purchasing insurance. However, you should never cut your costs down so low that you aren’t fully protected. There are too many costly risks. You can find a quality plan in your price range. We’d love to help you make that happen.