What Happens If You Don’t Have Homeowners Insurance?


If a fire, natural disaster, or other event were to destroy your home, you could lose everything you own and have trouble affording to rebuild your home or replace your belongings. With homeowners insurance, your insurance provider will cover the cost of replacing personal belongings and rebuilding your home. Read our guide to learn what could happen if you don’t have homeowners insurance in different scenarios and how to find the best homeowners policy for you.

If you are interested in home insurance but concerned about the cost, we recommend getting quotes from multiple companies in your area so you find the most affordable policy. To get quotes from providers near you, call 855-948-5219 or enter your zip code in our free quote tool:

What Is Homeowners Insurance?

Homeowners insurance coverage protects your home, property, and personal belongings from destruction. It also protects you from having to pay for medical bills or replacement costs if you injure someone or damage their property.

A homeowners insurance policy can be categorized into six types of coverage:

  1. Dwelling—This protects the home itself and anything built into it, like the floors, walls, HVAC system, electrical, and plumbing.
  2. Other structures—This protects detached structures on your property like fences, sheds, and garages.
  3. Personal property—This covers the cost of replacement items if your personal belongings are damaged.
  4. Loss of use—This part of the policy pays for living expenses, like the cost of a temporary rental or hotel room, if you have to leave your home during repairs.
  5. Liability—If you’re responsible for injuring someone or damaging their belongings, your policy will pay for any associated expenses, including legal fees if you’re sued.
  6. Medical payments to others—If a guest is injured on your property, your policy will pay for their medical bills.

Is Homeowners Insurance Required?

Homeowners insurance isn’t required by law in any state, but if you took a loan out to purchase your home, your lending institution will likely require dwelling and other structures coverage until you pay off your loan. This ensures that if you stop paying your mortgage, the lender has a properly functioning home to take and resell to get their money back.

5 Scenarios That Can Be Avoided With Homeowners Insurance

Here are a few scenarios that explore what could happen if you don’t have homeowners insurance:

1. Your lender sends your loan into default

If you cancel your homeowners insurance policy at any time during the life of your loan, your insurance company will notify your lender. Since this violates your mortgage agreement, your lender may force you into a more expensive policy, called lender-placed or force-placed insurance, or send your loan into default. Not only does this cause your credit score to decrease significantly, you’re also at an increased risk of losing your home to foreclosure.

2. You have trouble selling your home

Most real estate agents won’t take you on as a client if you don’t have home insurance. If an event were to destroy your home during the selling process, you would be out of a home to sell, and the realtor wouldn’t get a commission. While you can always sell your home yourself, you run the risk of not bringing in enough potential buyers or not understanding the legal and regulatory requirements of selling a home.

3. An event destroys your home and you can’t afford to fix it

If you don’t have enough money in your bank account to cover the cost of rebuilding your home after a destructive event, a home insurance policy could help cover the rebuilding costs and the cost of replacing all of your lost belongings.

4. Your home is burglarized and you can’t afford to replace your belongings

If your home is burglarized and you don’t have insurance, it’s up to you to cover the cost of replacing all of your belongings. Depending on the size of your home and the quality of your items, this may cost you $200,000 or more.

5. Someone gets injured on your property and sues you

Let’s say your child’s friend is jumping on a trampoline in your backyard and gets injured. That child’s parents could choose to sue you for not properly supervising them. If that happens, anything you own could be used as leverage in the lawsuit, from your home and car to your personal business.

How to Find the Best Homeowners Insurance

If you’re ready to buy homeowners insurance, keep these factors in mind:

  • Decide on your budget—Start the insurance buying process by determining how much room you have in your budget each month for homeowners insurance. This will narrow down your options to only companies that charge that or less for protection. If you’re having trouble finding a company that fits within your budget, see if you qualify for discounts or choose a higher deductible to lower your premium.
  • Determine how much coverage you need—Your dwelling, other structures, personal property, and loss of use coverage will be calculated using the rebuilding cost of your home. You can determine your rebuilding cost by talking to an appraiser, purchasing $100 to $155 of protection per square foot, or using the estimate provided by your insurance company. For liability coverage, you’ll want to purchase enough protection to cover the value of all of your assets.
  • Talk to your auto insurance provider—If you’re happy with your car insurance company, we recommend getting a home insurance quote from them. This will give you coverage from a company you trust at a reduced price because of a bundling discount.
  • Compare at least three quotes—Different insurance companies offer a variety of coverage options at different prices. The only way to know what policy will work best for you and your home is to get quotes from several companies and compare them.

Our Conclusion

To protect your home and personal belongings, it’s a good idea to invest in a home insurance policy. To see what your provider options are, call 855-948-5219 or input your zip code into the tool below:

To share feedback or ask a question about this article, send a note to our Reviews team at reviews@thisoldhousereviews.com.



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