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Can I be a homeowner without a policy?

 

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It is not mandatory for a homeowner to have a homeowner’s insurance policy by law, but it is highly recommended. However, if you need to have a mortgage to purchase your home, the lender will make it a requirement for you to purchase homeowner's insurance as part of giving you the loan. That’s because the lenders have to protect the investment made in your home, in case your house caught on fire or is horribly damaged by a natural disaster.

 

In the US, a lot of home buyers have to borrow money as part of a mortgage loan. The mortgage lender will always require the buyer to purchase at the very least a basic homeowners insurance policy. Purchasing a policy is not required by law, but it is required as part of a home mortgage loan. The only reason the loaner requires this, is to secure the bank if your home was destroyed by a natural disaster.

 

Anyone that you want to be covered for hazards can be added on the policy, in the case of an accident on the property. In certain cases the mortgagee will dismiss the requirement to purchase homeowner's insurance if the value of the property is larger than the total amount of the mortgage balance. A unique circumstance like this even the total loss of a building will not affect the ability of the lender to be able to foreclose and recover the total amount of the loan.

 

If you live in a location that is prone to flooding, the bank will make it a requirement for you to add flood insurance to your policy. Certain loaners could require earthquake coverage to be added on your policy, if you are in a location prone to earthquakes. If you buy a condominium or co-op, the board will most likely require you to purchase homeowners insurance no matter what the case is.

 

After your mortgage is paid off, it will not be required anymore for you to have homeowners insurance, but is highly recommended. Even when you mortgage is paid off, it is not smart to cancel your policy and risk losing everything that you’ve invested in for so long to get your home.

 

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