Cost of Home Insurance outweighs the Risk of no Coverage

If you have recently purchased a home, you are aware that most mortgage companies require you to have a home insurance policy before closing on the property. But once you get past this, you may find it easy to drop your coverage altogether. Why would anybody do this, you may ask? Simply put, they are more interested in saving money and not at all interested in the risk that this would bring into their life.

Do you know what your home insurance policy covers? If so, you should be able to figure out the risk of doing without. For instance, your policy will protect you against a certain level of theft. You may have $50k worth of coverage on the items inside your home. If a burglar runs off with your stuff, your home insurance company will give you up to your limit to replace everything. But guess what? If you do not have home insurance, you will be out of luck. In other words, your items are gone and you have to start from scratch without any help from an insurer.

Based on the example above of $50k worth of coverage, let's take a closer look at the risk involved with not having insurance. For argument's sake, you may pay a home insurance premium of $100/month which works out to $1,200/year. If you are robbed and lose $50k worth of items, you will be able to file a claim and re-buy these items. If you do not have coverage, you may save $1,200/year, but at the same time the risk is huge. You would have to do without insurance for nearly 42 years in order to make up the level of coverage that you would receive from your home insurance company. Sure, you may never be robbed, but can you deal with the risk hanging over your head?

Finally, remember that theft is not the only thing that home insurance covers. It will also keep you safe from other instances such as fire, liability, and much more. All of these details will be outlined in detail on your policy.

The bottom line is that the cost of home insurance outweighs the risk of having no coverage at all. Once you take a look at the numbers above, you will surely agree that this type of risk is not something that you want to deal with.