What Can Happen if You Don’t Have Homeowners Insurance in 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.