Do you need homeowners insurance?

There is no law requiring you to buy homeowner’s insurance. However, to qualify for a mortgage, your lender will likely require it. (iStock)

If you own a home, you need homeowners insurance. Of course, you may not want to buy insurance coverage — perhaps you're concerned about not being able to cover the costs, not sure what it covers, or no one has pressured you to purchase a policy. And you certainly don’t want to pay more for a policy that isn’t tailored to your needs.

Comparing multiple insurance quotes can potentially save you hundreds of dollars per year. And, it’s so easy to get a free quote in minutes through Credible’s partners here.

Homeowner’s insurance covers you from unexpected and often very costly damage to your home and personal property. Home equity or mortgage loan holders also will likely require that your home is insured. Accidents happen. Be prepared for when they do.

Are you required to get homeowner’s insurance?

Although there is no law requiring you to have homeowners insurance, most lenders require you to have insurance before they finance your home. A homeowner’s policy protects both you and the lender in the case of a devastating covered event, like a fire, flood, or tornado. If you own your home and no longer have a mortgage, you don’t need insurance. But why take the risk?

Generally, you will name your mortgage lender as a loss payee on your policy. If your home is damaged, the payment you receive from your insurance will go to the lender, or to both you and the lender jointly to repair or rebuild your home. If you choose not to repair the damage, the money will go to pay off your mortgage.

If you want to see what kind of homeowners insurance options are out there, head to Credible. Credible makes it easy to compare quotes, saving you both time and money.

Today’s mortgage rates

As of November 12:

  • A 30-year fixed-rate mortgage (FRM): 2.84%
  • A 15-year fixed-rate mortgage (FRM): 2.34%
  • A 5/1 year adjustable-rate mortgage (ARM): 3.11%

With rates this low, you may also want to consider refinancing your mortgage to lower your monthly payments, cut the life of your loan, and save money. Credible can help you browse mortgage lenders so you can find the best mortgage refinance rates around.


3 reasons you need homeowners insurance

Like any insurance policy, homeowners insurance is one of those things you hope you never use. But if you need it, it’s worth every penny. Head to Credible to make sure you're not overpaying for homeowners insurance.

There are many reasons why you need homeowners insurance:

  1. Most mortgage lenders require you to have a homeowner’s insurance policy before they write you a loan. 
  2. The Consumer Financial Protection Bureau allows your lender to buy insurance for you if you don’t purchase a policy independently. 
  3. Homeowners insurance covers more than just the dwelling where you live. Other structures, like a shed or an attached fence Personal property against loss, theft, or damage Personal liability in case of injury to a guest Living expenses if you’re not able to live in your home during repairs
  4. Other structures, like a shed or an attached fence
  5. Personal property against loss, theft, or damage
  6. Personal liability in case of injury to a guest
  7. Living expenses if you’re not able to live in your home during repairs

When you’re ready to settle down and get yourself a mortgage, visit Credible to compare lenders and mortgage rates.

What if you don’t have homeowners insurance?

If you have a mortgage, you almost certainly have homeowner’s insurance. But if for some reason your lender didn’t require you to carry insurance, you canceled your policy shortly after you closed on your loan, or you’ve paid off your mortgage and decided not to renew your policy, there are consequences.

  1. Your lender may find an insurer for you. This is called a force- or lender-placed insurance. The premium might be higher than you may have paid, and it may not cover all the items that matter to you. 
  2. Your lender may place your loan in default. If this happens, your credit takes a serious hit, and you may lose your home to foreclosure.
  3. If you don’t have a homeowner’s insurance policy, it may be harder to sell your home. 
  4. If your dwelling is damaged, you may not have the funds to make the repairs. 
  5. Your expensive valuables—computers, jewelry—aren't covered against damage, loss, or theft. 
  6. If someone visiting you gets hurt on your property, you’ll have to pay for their medical bills, and they could sue you.  
  7. What do mortgage lenders require with homeowner’s insurance?

Most lenders require that your homeowner’s insurance covers 100% of the replacement cost of your home. At a minimum, your mortgage lender will require your insurance policy to cover these perils:

  • Fire, lightning, and smoke damage
  • Wind and hail
  • Snow, ice or sleet, and frozen pipes
  • Falling objects
  • Explosions
  • Vandalism, theft, riots, and unrest

Your lender may also require insurance for floods, windstorms, and earthquakes. And while it may not be generally required, depending on where you live, it may also be necessary to add additional coverages against water damage and sewer backup.

If you’re researching or shopping for homeowners insurance, visit Credible, and get your questions answered.