Before we begin this journey of dissecting the possibilities and counter-possibilities of this question, let’s take a deep breath and begin first by understanding the terms”Home Insurance”and how they apply to you.
Home insurance covers the loss and damage of your property. This includes internal furnishings and assets inside of your house. So for home insurance, premiums are paid to your chosen insurance provider so that in the eventuality of any change to your property, the cost of the damages would be adequately taken care of. However, there are certain requirements that are necessary that also help you spend less on your insurance and these are called Deductibles.
What are Deductibles?
Deductibles are the amount of money you have to pay in the occurrence of a loss. This is usually done before your insurance company starts to pay a claim, according to the terms of your policy.
This implies that there are various house insurance policies for different scenarios. For instance, there would be a need for a special provision of a house that is prone to hurricanes, tornadoes etc as they have a higher propensity of being damaged.
This brings us to the incidents and scenarios that are not covered by house insurance which include:
1. Acts of War.
2. Acts of God.
1. Acts of War:- These are damages incurred as a result of riots, strikes, military coups, invasions and terrorism.
2. Acts of God:- These are occurrences that are caused by natural occurrences like earth and floods with the exception of natural disasters like tornadoes and hurricanes.
However, there are four possible damages that would be incurred on your home that would require the services of your home insurance company.
They include:
1. Loss/Damage of property.
2. Injury of the property
3. Interior damage.
4. Exterior damage.
The fees to be paid on premiums would drastically reduce when the deductibles are high. In essence, the higher the deductible, the lesser the amounts paid on premiums and vice-versa.
Mortgages on the other hand are insurance that helps protect the lender in case you do make your payments on time. Most times the requirement for getting a mortgage is that you have home insurance.
Even if you have your own house, it would still be an important necessity to own house insurance as this cushions the effects of unforeseen and unexpected damages to your house.
Now to the main issue discussed.
Is home insurance cheaper without a mortgage?
The answer is Yes. However, there is a risk factor and it’s this: any damage that eventually occurs on your property would be totally borne by you. There would be no support from any angle if you choose to obtain the house insurance without a mortgage.
The choice then is yours to make. If you have a cash flow that is sufficient enough to cover any unforeseen occurrence no matter how the scale and magnitude it may be, you can then go ahead to purchase the home insurance without the mortgage.
But is it a possibility? Yes, it definitely is.
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