Have you seen the ad on TV where the sales person says that homeowners insurance covers zombie invasions? Like most insurance ads, it’s memorable. It also raises a good question, “Why do you need homeowners insurance?”
Whether You Need Homeowners Insurance or Not, There’s One Reason Most People Must Have it
If you have a mortgage, your lender will force you to buy insurance. Don’t let your insurance lapse, or the mortgage lender will buy the insurance for you and bill you. What they buy will be very expensive and probably won’t cover your belongings, because your lender doesn’t care about your belongings.
The Other Reasons You Need Homeowners Insurance
Here is a list of the most common reasons for homeowners to make claims on their home insurance. The statistics below are for the five-year period from 2010 to 2014:
- 45% of all home insurance claims were due to damage from wind and hail
- 27% of all claims were the result of water damage and freezing temperatures
- 14% were from property damage, often caused by vandalism
- 7% were from theft
- 5% of the claims were due to fire and lightning
While the reasons above account for 98% of the claims, fire and lightning was the most expensive type of claim. In industry terminology, this is called severity.
How Risk Affects the Cost of Your Insurance
What all this means for you is that if you live in an area prone to wind, hail or fire, your homeowners insurance will be expensive. If you live in an area subjected to water damage and freezing temperatures, you will pay a higher price, but not as high as someone living in an area with a high risk of wind, hail and fire. In some regions of the country, more than one of these risk types apply. If that’s you, start saving your money, your homeowners insurance will be expensive.
Everyone buying home insurance should check to see how good their insurance company is about paying claims. This data is now collected and analyzed. Now you can know if the insurance company you rely on to protect your home has a willingness to stand with you as a partner when it’s time to pay for the damages to your home and losses you may suffer. Click the button below to compare your home insurance to the best companies in your state.
Note: ValChoice does not receive any form of compensation from insurance companies for presenting them as a good option in our car and home insurance reports. Our analysis is completely independent of the industry.
Data source: ISO®, a Verisk Analytics® business and the Insurance Information Institute, iii.org.