Pros & Cons of Indiana Home Insurance Coverage
If your mortgage recently came to an end and you own your home free and clear you may be considering dropping your Indiana homeowners insurance coverage. While losing this monthly bill would certainly be good news this is a dangerous strategy that can end up putting your home and other assets at risk. If you decide to drop your coverage you and you alone will be responsible for all costs to repair or rebuild your home is damaged or destroyed by a storm, fire or other disaster.
When you still have a mortgage your lender will require that you carry homeowners insurance in order to protect their investment. The majority of homeowners heed this advice, according to data from the insurance information Institute (III) 98% of homeowners with a mortgage have a homeowners insurance policy in place.
Once you have fulfilled your mortgage obligations you’re free to dump your insurance coverage. Choosing this strategy will certainly put you in the minority, statistics from the III show that only 3% of homeowners across the country are living without homeowners insurance. People going without coverage tend to fall into two groups, those that can afford to self-insure their properties and homeowners who can no longer afford their premiums.
Indiana is a great state for homeowners insurance, mainly because we have very reasonable rates. According to ValuePenguin, the average premium for a homeowners policy is $944 a year which is 13% below the national average. Obviously, prices can vary throughout the state, you may end up paying more in large cities such as Indianapolis, Louisville or Fort Wayne but overall the cost of insurance is very reasonable in Indiana.
If you are seriously considering letting your insurance policy lapse we encourage you to take a few minutes to consider the risk that come along with this decision. Let’s have a quick look at the pros and cons of dropping your homeowners insurance coverage.
Saving Money is Really The Only Pro
The only real advantage to dumping your coverage is the money you save.
Saving Money: While dropping your coverage certainly results in some savings, the money you put back in your pocket will probably not be worth the risk. If you are paying the average premium you will only be saving $78 a month, is that worth risking your home, retirement savings and other assets?
It’s important to remember that if drop your coverage you will be on the hook for all repair and rebuilding costs if your home is damaged or destroyed. In addition to those costs you could end up buried underneath a mountain of medical and legal bills if someone is injured at your property. Finally, insurance will help replace all of your damaged or destroyed possessions, without coverage you will have to cover that cost alone
Indiana is certainly familiar with severe weather including tornadoes. If you are the victim of a major storm, lightning strike or fire, it will be up to you to put your house back together and replace all of your possessions. These types of cost can quickly add up, pushing many people into bankruptcy
Keeping Coverage is a Good Idea
There are plenty of good reasons for keeping homeowners insurance.
Rebuilding and Repair Costs:Help with the cost to repair or rebuild your home is probably one of the most important reasons for keeping homeowners insurance. Storms, fire and other perils can do significant damage to your home very quickly and if you are not carrying an insurance policy it will be up to you to put your house back in order or in some cases have it completely rebuilt. Unless you are able to easily handle these types of expenses you should never be without homeowners insurance.
According to the Zillow, the median home price in Indiana is a very affordable $140,700. Obviously prices can vary depending on your location but regardless of where you live if you are not carrying homeowners insurance you will be responsible for the $140,000 (or much more) to repair or rebuild your home after disaster strikes.
In addition to your house, a homeowners policy covers all detached buildings on your property. If you have a barn, shed, outbuilding or detached garage they will all be protected by your homeowners insurance. It should be noted that there can be coverage caps with this portion of your policy to check with your insurance agent for the specific details of your policy.
Liability Can Be a Major Risk: Liability risks can end up being much more expensive them having to rebuild your home. The liability portion of your policy helps to pay medical and legal bills if someone is injured in your house or on your property. If you are no longer carrying homeowners insurance all of these costs can end up falling to you.
Medical bills can quickly spiral out of control especially if the injury is serious. In addition to medical bills you may be looking at extensive legal costs if the injured person decides to sue. Legal bills, settlements or judgments can easily run into the millions of dollars if a person is seriously injured at your home. If these types of cost would put you in financial stress you should absolutely be carrying homeowners insurance.
If you are serious about dropping your homeowners insurance we highly recommend putting a standalone umbrella policy in place to address your liability risk.
Living Expenses Are Included:The additional living expenses portion of your policy will help cover the day-to-day costs if your home is unlivable after being damaged by a covered peril. This coverage will reimburse you for expenses such as hotel bills, restaurant meals and even laundry expenses. If you are forced out of your home for a significant amount of time this coverage can save you thousands of dollars.
Replacing Your Possessions Can Be Expensive: Over the course of your lifetime you have probably acquired quite a few possessions and if you are uninsured you will have to cover the costs of replacing those items. Take a quick look around your house and imagine having to replace everything you see. If these types of costs would put you in financial distress you should be carrying homeowners insurance.
Weather and fire are not the only dangers you have to worry about, burglary and vandalism are covered by homeowners insurance as well. Crime rates vary across the state but according to Neighborhood Scout, Indiana residents have a 1 in 41 chance of being the victim of a property crime. This translates into almost 30,000 burglaries a year.
Most standard homeowner insurance policies have a coverage limit when it comes to high-value items. While the coverage cap will vary by insurer, $1,500 is pretty common. This limit applies to items such as jewelry, artwork collectibles, fur coats and even wine collections. If you have high value items that exceed this limit you may need a rider to fully protect your property.
A Few Homeowner Insurance Tips
Here are a few tips about homeowners insurance and a couple of tricks to lower your premium:
Flood and Earthquake Damage are Excluded:All standard policies exclude coverage for flooding and earthquake damage. If you live in a high-risk area for either flooding or earthquakes you will need to carry a separate policy. Flood insurance can be expensive but it is well worth the cost if your home is damaged by floodwaters.
Push Up Your Deductible: If can afford it, raising your deductible is a great way to save money on homeowners insurance. Doubling your deductible should result in a 10 to 20% discount on your policy. Make sure you choose a deductible that you can easily afford in the event you have to make a claim on your policy.
Discounts Are Your Friend: All insurance companies offer a wide variety of discounts. Contact your agent and ask them to do a discount review on your policy to make sure you are getting all available discounts.
Shop Your Policy Annually: Shopping your coverage is one of the best ways to lower your premium. Shop your coverage on an annual basis because insurers rate risk differently which can result in dramatically different premium quotes. Always compare apples to apples when it comes to deductibles and coverage limits.
HomeInsuranceKing.com is happy to help you compare up to 12 rates and coverage options. If we can help you save money, while also improving your coverage, please click here to get online Indiana home insurance quotes now.