Will My Home Insurance Change After I Pay Off My Mortgage??

Will My Home Insurance Change After I Pay Off My Mortgage?

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The main goal of nearly every homeowner is to pay off your mortgage. Fully owning your home is a wonderful feeling that few get to experience after years of hard work and consistent payments. However, there are other considerations to make when it comes to paying off your mortgage—such as what to do about your home insurance policy.

Believe it or not, home insurance isn’t required by state or federal law. It is, however, typically required by mortgage lenders to cover the cost of your mortgage. This is to protect the lender in case of an accident or disaster. Once you pay off your mortgage, you will no longer be required to carry home insurance. In fact, you could likely cancel your home insurance policy. This is far from recommended, however.

Even with a loan no longer requiring your policy, there are countless benefits to it. The risks associated with your home remain the same. Here are a few key examples:

Someone breaks into the home—When this happens, you can lose thousands of dollars’ of collectibles, electronics, and other valuables. You also have damage to repair. This can be expensive to overcome.
A fire breaks out—Without home insurance, a fire could destroy your financial health. If the fire is significant, it may mean you can to obtain a new loan to build a new home, if you lack coverage.
You could face a lawsuit—Perhaps you decide to add an extension onto your home, but a worker falls and suffers a significant injury. You could be liable for the losses here, too. Without liability insurance, these risks are your own to bear.

What You Should Do

Instead of allowing this to limit you, consider speaking to your insurance agent about your options. Talk about:

Whether the amount of coverage you have is the right amount
What risks are present
What safety steps you can take to minimize risks

What discounts and rewards you may qualify for
How you can save by bundling your policies

There are various reasons not to cancel your home insurance policy even after you pay off your mortgage—first and foremost with your home and family’s safety in mind. Home insurance can protect you from heavy financial loss that has nothing to do with your mortgage, so be sure to speak with your insurance agent about the coverage you may need.

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