Are Homeowners Required To Have Homeowners Insurance?

Home insurance is not required by law, although mortgage lenders require it before they will lend you money for your house purchase. 

Home insurance safeguards the mortgage lender’s investment by providing the funds to restore or rebuild the home if it is damaged or destroyed by a fire, a storm, or another covered cause of loss.

A home warranty is sometimes confused with home insurance, and they answer entirely different problems. One covers sudden accidental loss, the other covers mechanical breakdown of systems and appliances. The distinction is set out in home insurance compared with a home warranty.

The benefits of homeowner’s insurance

Your home is your most precious possession, and homeowners insurance can help you safeguard it. Below are the advantages of having home insurance.

Secures your residence and personal assets

If there is destruction to your house due to a fire, a storm, or a break-in, your homeowners policy is built to respond to the cost of repairing or rebuilding, up to the dwelling limit and after the deductible. Personal property coverage applies separately to your belongings, subject to its own limit.

Offers liability insurance

Homeowners insurance offers coverage for legal fees and any damages you might be obliged to pay if a guest gets hurt on your property and files a lawsuit.

Additional costs of living

Loss of use coverage is built to help with temporary accommodation when a covered loss makes the home unlivable during repairs. It reaches the increase in your living costs above what you normally spend, rather than the whole bill, and it carries its own limit and often a time cap. Both appear on your declarations page.

What it does not cover: earthquake and flood

This is the point Californians most often get wrong. Earthquake and flood are excluded from every standard California home policy. Neither is covered, no matter how comprehensive the policy looks. Each is bought separately, through earthquake insurance or a flood policy, and in a wildfire-affected market a difference in conditions policy is sometimes where both are addressed. A standard policy does respond to fire, wind, hail, and similar named or open perils, depending on the form.

What else sits inside the policy?

Four things round out a standard policy, each with its own limit on the declarations page.

Medical payments to others. A modest limit covering medical costs for someone injured on your property without regard to fault, designed to settle small incidents before they become liability claims.

Other structures. Detached garages, fences and sheds, usually written as a percentage of the dwelling limit rather than a separately chosen figure.

Personal property, with caps inside it. Jewelry, artwork and collectibles are covered, but categories like these carry special limits well below the overall contents figure. Scheduling is how that cap is lifted.

A personal umbrella policy is not part of it. Umbrella coverage sits above the homeowners policy as a separate contract, and carriers require the underlying limits to reach a stated threshold before they will issue one.

If you don’t have home insurance, what happens?

Being without home insurance is like taking a chance with your home. You’re assuming that nothing negative will happen to your property. Even so, many factors that can harm your home, such as robbery, vandalism, and natural disasters, are completely outside your control. If you’re lucky, nothing will happen. But if you aren’t, there may be dire repercussions.

What doesn’t a homeowner’s policy cover?

• Earth movement, which includes earthquake
• Flooding
• Neglect 

When coverage is required and when it is simply sensible

A homeowners policy responds to the causes of loss it names, within the limits on the declarations page and after the deductible is met. What it does not reach is set out just as clearly in the exclusions, and both halves are worth reading before you need either.

We can read your declarations page with you and tell you what it does and does not reach. Call the agency at (818) 322-4744. You can also request a quote online. Topics and coverage discussed in this article are not guaranteed, consult with your agents to determine what your policy does and does not cover.

Disclaimer

This article is provided by Schneiderman Insurance Agency for general informational purposes only. It is not legal, tax, financial, claims, or coverage advice. We are licensed insurance professionals, not attorneys, accountants, or financial advisors, and nothing here should be relied on as a substitute for advice from a qualified professional in those fields. This content is general in nature and is not a review of, or a recommendation for, any individual reader’s specific insurance needs, policies, or circumstances. Insurance coverage depends entirely on the specific terms, conditions, endorsements, exclusions, limits, underwriting eligibility, carrier, and facts of each situation, and the actual policy language always controls. We do not guarantee any coverage, pricing, eligibility, underwriting approval, or claim outcome. Reading this article does not create an agent-client relationship. To understand how these issues apply to your situation, please review your own policy and speak with a licensed insurance professional, and consult legal, tax, or financial advisors where appropriate.