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By: Aquib Nawab
Finance
Without insurance, any repairs for damage to your home from disasters like fires, storms, or theft will require large out-of-pocket expenses. These costs can easily reach thousands or even hundreds of thousands of dollars, which most homeowners cannot afford without insurance.
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If your home is completely destroyed by a fire or natural disaster, the costs to demolish, clear, and rebuild can be $200,000 or more. Without insurance funds to help cover these expenses, you may not have the ability to rebuild your home at all if you don't have savings set aside.
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Major damage or destruction that you cannot afford to repair or rebuild could mean you end up defaulting on your mortgage and losing your home altogether. This type of financial burden is extremely difficult to recover from.
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You are vulnerable to lawsuits if someone gets injured on your property. Without insurance, you'd have to pay legal fees that average $200 per hour plus any settlement or award, which can easily exceed $50,000 if someone is seriously injured.
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You might need a place to stay if your home is damaged and unlivable. Without insurance, you'd have to pay out-of-pocket for hotels that can cost $100 per night, restaurant meals that average $12 per meal, furniture rental fees, and other costs during the repair period. This can easily exceed $5,000.
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Most mortgage lenders require at least $100,000 in dwelling coverage. If you cancel your policy, your lender may purchase a policy on your behalf for $1,000 per year on average and charge you for it, potentially leading to default if you cannot pay.
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Homebuyers want protection in place in case they suffer a $50,000 loss after purchasing the home. An uninsured home is high risk and unappealing to buyers, making it much harder to find a willing buyer.
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Anything stolen or destroyed in a disaster is not covered without insurance. You would have to replace valuable electronics, furniture, clothes and more that could easily exceed $30,000 in losses.
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Homeowners policies offer useful add-ons like $100,000 in flood insurance, $10,000 for water backup coverage, and $300,000 in increased liability that protect your assets. You lose out on these key options by going uninsured.