For many homeowners in Troy, Michigan, home insurance is something you think about only once a year — when it comes time to renew your plan.
Most homeowners will spend a lot of time finding the right homeowners insurance policy for them at the time they buy their home. They’ll research the best prices from various companies based on the coverage they need, and then they forget about it.
Because a lot of home insurance premiums are paid as a bundle through monthly mortgage payments, they can become an after-thought for many people. That is, until they get their renewal bill on the anniversary of the plan and realize their premium is going up.
Home insurance works in a lot of the same ways that other insurance policies do. Premiums can go up or down based on a number of factors. Some of these have to do with the policy holder themselves. Some have to do with the item being insured. Some are based on other outside factors.
If you’ve received an increase in your home insurance premium, you might be wondering why. Here are some of the most common reasons for that in Troy, Michigan.
Michigan is one of the few states in America that doesn’t require homeowners to carry homeowners insurance. As long as you own your home outright — or your mortgage company doesn’t require it — you are not forced by state law to insure your property.
This might sound like a good thing for residents, as they have a choice in what insurance they do and don’t buy. However, there are many downsides to not having homeowners insurance, even if you are not currently financing your home.
If you choose to save a few dollars now by not having homeowners insurance, it could cost you bundles of money later. It could also result in you losing your home if something bad happens.
Here are some of the risks you’re taking if you don’t carry homeowners insurance.
You Could Default on Your Mortgage
While Michigan state law doesn’t require you to carry homeowners insurance, your mortgage company most likely will, if you’re financing your home. That’s because they want to be able to protect what is, in fact, at least partially their asset until you pay off the loan.
Before you close on your loan, your mortgage company will most likely require you to pay for the first year’s worth of homeowners insurance up front. They’ll also want to see proof that you did this.
After that first year, some mortgage companies will require you to pay your monthly homeowners insurance premium as part of your mortgage payment. Those that don’t may require annual proof that your policy is still active.
If you decide to drop your homeowners insurance while you are financing your home, your mortgage company will get notice that you’ve done so. Then, they might send you notice of the need to get homeowners insurance, or you’ll be in default and face foreclosure.
You Could Have Trouble Selling Your Home
If you’re trying to sell your home, not having homeowners insurance could be disastrous. Some homeowners will drop their insurance policy as they are selling their home to save some money.
But, what happens if the home suffers catastrophic damage while the process of selling the home is still ongoing? Unfortunately, it would mean that not only would the homeowner lose out on the deal, but they could lose the home as well.
Homeowners insurance provides protection all the way up until the day a home is sold. This is why it’s important to always carry it until you are no longer the owner of the home.
You Will Have No Property Protection
Hopefully, you’ll never have to file a claim on your homeowners insurance. If you do, though, it’s likely that it’s because your property has sustained substantial damage.
This damage could be caused by weather such as ice, water or wind. It could be caused by a pipe bursting. Or, it could be from some other unlikely cause.
Homeowners insurance will help you in these or other situations, as long as the damage is caused by a covered event. If your deck is damaged by a hail storm, for example, your homeowners insurance policy could help you fix and/or completely replace your deck with a new one.
If there’s damage to the inside of your home, homeowners insurance policy often helps compensate you for the loss of any of your personal property. Clothes, appliances and technology that were damaged as a result of a flood caused by a pipe bursting could all be replaced through your homeowners insurance policy.
If, in the unfortunate incident that your home suffers catastrophic damage, your homeowners insurance could help you replace your home completely — as well as everything you had inside it.
This also pertains to your personal items if your home is burglarized. Your homeowners insurance can help you replace expensive items that a burglar may have stolen.
In any of these situations, if you didn’t have homeowners insurance, you would be forced to pay for all of these expenses out of your pocket. While you may be able to afford fixing small damage to your home, you might have a tougher time doing so if the repairs are extensive.
You could even lose your home altogether if you can’t afford to make the repairs necessary for it to be safe to live in your home after it sustains catastrophic damage.
You Could Be Liable for Other Damages
Homeowners insurance does more than just cover your home and personal property if it suffers damage, though. It also protects you in case someone else gets injured on your property.
If any visitor to your home gets injured on your property, you are responsible for whatever damages they suffer as a result. If someone trips and falls in your driveway, for example, you could be held liable for their medical bills, lost wages and other related expenses they incur.
If you don’t have homeowners insurance, you won’t have protection in this case. This could leave you responsible for paying for a legal team to defend you in court, and could leave you responsible for paying all these expenses out of your pocket.
Homeowners insurance provides liability protection. This way, if someone is injured on your property, you are covered and don’t have to worry about taking on loads of debt to meet your responsibility.
Whether you own your home outright or are still financing it, having homeowners insurance is an essential part of owning a home. It provides you the protection you need for your home, your property and your possessions. Going without it is just not a chance you want to take.
You Updated Your Home
Homeowners take on renovation projects all the time. Some are small. Others are large. Almost all have a direct relation to the value of your home.
It’s fairly common knowledge that projects such as renovating your kitchen or adding a bathroom will increase the value of your home. From a homeowner’s perspective, that’s a great thing. It’s always nice to increase the value of your assets.
From an insurance perspective, this might result in an increase in your premium. As you improve the value of your home, you might be required to increase your insurance coverage limits to make sure you are well protected.
Depending on the type of renovation you’ve done, you might need extra insurance, too. If, for example, you installed an inground pool, you may be required to have extra liability insurance. This will result in an increase in your premium.
You Got a Dog
Adding a dog to your family can be an exciting addition to your home. They can bring great joy to all members of your household. But they can also bring increased costs to your insurance premiums, too.
Insurance companies view everything from a risk standpoint. Unfortunately, dogs carry risks with them. If your dog bites a mailman, for example, you will be liable for the damages that he or she causes. Those damages will be covered by your home insurance protection.
Because of this, home insurance companies view dogs as an insurance risk. As a result, they charge higher premiums to homeowners who have a dog.
Another Year Went By
One of the most common reasons why your home insurance might increase is the simple fact that time has passed.
Everyone gets older with each passing day. So, too, do the major features of your home. Older features are more likely to need repair and, as a result, are riskier to insurance companies.
Roofs are one of the more expensive items that need to be replaced on a home. The most common type of roofing material, asphalt shingles, typically last about 15-20 years. Other types of roofing materials will have their own typical lifespan.
When roofs get up there in age, they become much more susceptible to cracks or damage from Mother Nature. As they become more susceptible, they become more likely to need small patches, larger repairs or full-scale replacement.
The same goes for other exterior features such as fences, decks and siding. The older each of these things get, the more expensive they are to insure.
You Took Out a Claim
Unfortunately, something may have happened recently that forced you to take out an insurance claim. Most of the time, these things are out of your control. It may have been a weather-related incident. It may have been a pipe bursting.
Whatever the reason for it, a claim against your insurance policy will often result in your premiums increasing. Your insurance company will assess the reason for your claim and the amount of your claim to determine whether your rates will increase. The more often you file claims, the higher your rates will be, too.
If you’re able to remain claim-free for an extended period of time, though, you’ll be able to see a reduction in your home insurance cost.
Crime Went Up
This is another outside factor that you have no control over. One of the ways that your home insurance cost is determined is based on the crime rate in your area. Regions with lower crime rates typically have lower home insurance premiums, and vice versa.
The thing is that this is a revolving measurement. Crime rates will often stay relatively steady in a particular area from year-to-year. However, if the crime rate goes up, it’s possible that your home insurance premium could go up, too.
Again, this is not something that you will have direct control over, but it could have a significant impact on the cost of your home insurance premium.
Work with a Home Insurance Company You Can Trust
Your home is most likely one of your most valuable assets. But it’s more than just that. It’s a place where you and your family gather for meals, sleep and make memories. Your home keeps you and your loved ones protected.
That’s why it’s so important to work with a home insurance company that will keep you protected, too. At Signature Insurance, we partner with all of our customers to provide insurance coverage that caters specifically to their needs. We care about our customers and the things they entrust is with protecting.
Call us today to get a home insurance quote, and find out why we’re the most trusted home insurance company in Troy, Michigan.
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