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3 Important Reasons Not To Cancel Your Homeowners Insurance

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Do you own your own home? Are you trying to come up with ways to save money on your bills? When saving money, many people inevitably start canceling various unnecessary services. For some, this means canceling one or more insurance policies. But while you can cancel your life or health insurance policies and hope for the best, you probably don't want to cancel your homeowners insurance. There are a variety of reasons for this, some of which are:

Required by the bank: In order to have a mortgage, banks typically require insurance to be purchased as part of the agreement. If you cancel your current insurance policy and the bank finds out about it, they will purchase a plan of their own choosing, a practice called forced coverage, and add it to the cost of your mortgage payments. Unlike you, the bank won't shop around for homeowners insurance until they find the best policy. They will generally have just one company that they use and it may be much more expensive than what you're already paying. Avoid having your bills go up by shopping around for insurance and possibly getting a new policy instead of simply canceling the old policy. Make sure to notify your bank of your updated insurance information if you do this.

Protection from lawsuits: It's unfortunate that anyone would have to think of such a thing, but you need to seriously consider lawsuits - especially if you live in an area where it snows or otherwise gets icy. If someone should happen to slip and fall on your icy sidewalk, even if you've been doing your best to keep it clear, their health insurance policy may require them to file a lawsuit against you before their medical bills will be covered. They may not even want to sue you, agreeing that it's not your fault, but they may have no choice. A good homeowners insurance policy protects you from lawsuits like this, preventing you from losing your home if someone is accidentally injured on your property.

Loss of use coverage: Should your home become uninhabitable due to fire, flood, storm damage, or anything else covered under your homeowners insurance policy, a good policy will pay for you to live elsewhere until your home can be brought back into a habitable condition. This includes paying for such things as hotel bills, extra food expenses, and certain other expenses related to being unable to live in your own home. If you cancel your policy "to save money" and then a tree falls on your home, you could be forced to sell at a deeply discounted price just so that you can afford to live elsewhere.

For more information, contact companies like Mid-Alliance Insurance Associates LLC.