Selling in the San Francisco Bay Area, a fair portion of my transactions are all cash. (People who have IPO'd from a dotcom or who have money wired from Asia are quite common. It is simply insane how much money people have in tech & abroad!). A common question I get is "Do I still need home insurance if I pay all cash for my house?" Technically, no. But you still should. Let me explain.
If you have a loan, your lender will require you to buyer home owners insurance (they have to protect all the money they are lending you!). But if you buy with all cash, then you do not need home insurance. However, that does not mean you should not have it! What if your house burns down? All your 'cash' goes up in smoke. Or, what if your nasty neighbor trips and falls on your property? They'll will sue you up the wazoo, win the case and get your house too!
I know if may seem like you want to save some money each year by passing on home insurance, but I guarantee you it is a small cost to the aforementioned disasters. Keep in mind that insurance companies tend to lower your home insurance costs once you've paid off your mortgage entirely (they seem to believe that if you own it outright, you are more likely to take better care of it). So, if you pay all cash, your insurance costs will not be as high as your neighbor, who has a loan on their house.
Also, to cut costs, some insurance companies like Aviva give you a discount if you buy bundle package. I always tell my buyers that if they auto insurance, give that carrier a call first because they will most likely give you a break on your home insurance too.
Remember kiddies, when it comes to insuring your home, better safe than sorry!
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