Do you need homeowners insurance if the house is paid off?
Asked by: Hilda Mante | Last update: August 29, 2025Score: 4.7/5 (42 votes)
Do I need homeowners insurance if my home is paid off?
Once you pay off your mortgage, your lender can no longer require you to have home insurance. Or if you bought it cash you have no obligation to ever have it.
Do you need homeowners insurance if you pay cash?
If you're purchasing your new home with cash or an unsecured line of credit (credit card or personal loan), you may not be required to show proof of home insurance before closing. Home insurance isn't mandated in any state, but you should still consider buying homeowners insurance to protect the equity in your home.
When can you remove homeowners insurance?
At closing, once the buyer officially owns the home, you can cancel your coverage. Until that time, your homeowners insurance policy should remain in place to provide protection should anything happen to the home.
Do I need homeowners insurance if I own my home?
Theresa Simes, a Farmers Insurance® agent in Fountain Valley, California, discusses the need for home insurance. A: Home insurance isn't required by law, but there are other reasons to insure your home. If you have a mortgage on it, your lender will require you to have insurance until the loan is paid off.
Should I Keep Paying My Homeowners Insurance?
What would happen if a homeowner had no homeowners insurance?
Without homeowners insurance, you would be responsible for all the legal fees, medical bills, and potential settlements. Liability coverage, which is typically included in homeowners insurance, protects you from these unexpected costs.
What is the 80% rule in homeowners insurance?
The 80% rule means that an insurance company will pay the replacement cost of damage to a home as long as the owner has purchased coverage equal to at least 80% of the home's total replacement value.
How long can you go without homeowners insurance?
While a brief lapse in coverage might not seem like a huge deal, going without homeowners insurance for even a day or two puts you at financial risk. Additionally, many insurance companies won't accept late premium payments. So if you continually miss payments, your policy could be canceled automatically.
Can I opt out of homeowners insurance?
Legally, you can own a home without homeowners insurance. However, in most cases, those who have a financial interest in your home—such as a mortgage or home equity loan holder—will require that it be insured.
Is home insurance tax deductible?
You may look for ways to reduce costs including turning to your tax return. Some taxpayers have asked if homeowner's insurance is tax deductible. Here's the skinny: You can only deduct homeowner's insurance premiums paid on rental properties. Homeowner's insurance is never tax deductible your main home.
Is homeowners insurance always required?
Is homeowners insurance required? There's no law that requires home insurance. But mortgage lenders do require you to get home insurance coverage before they will agree to finance your home purchase.
Does insurance go down when house is paid off?
Unfortunately, paying off your mortgage doesn't reduce homeowners insurance premiums. You will no longer be required to carry home insurance as it isn't legally mandated, but your home will still require the same level of coverage to protect you from financial losses.
Is it illegal to have no home insurance?
Home insurance is not legally required in California. This means that the state does not mandate that homeowners purchase home insurance, but this doesn't diminish its importance.
Is homeowners insurance required if house is paid off?
But now that your loan is paid off, you are responsible for making your homeowners insurance payments. Although you are not legally required to have homeowners insurance, you should think twice before you cancel your insurance.
What should you not say to homeowners insurance?
Avoid any admissions of fault or liability when talking to your adjuster. Such statements can be used to shift blame, potentially decreasing the amount you might be compensated. Instead, focus on describing the damage and the events as they happened, without inserting personal opinions about who might be at fault.
When should you cancel homeowners insurance?
It's best to wait until you have a closing date before submitting your request to cancel the insurance. Also, keep in mind that if you submit a cancellation request and the closing is postponed or the contract falls through, you will need to let your insurance agent know so they won't cancel the coverage.
How many people do not have homeowners insurance?
One in 13 American homeowners are uninsured – approximately 7.4% – living in about 6.1 million homes. Homeowners earning less than $50,000 per year are twice as likely to lack insurance compared with homeowners in general. Among lower-income homeowners, 15% are without coverage.
What states require homeowners insurance?
No states have laws mandating homeowners insurance, but, if you finance your home, your lender will typically require a home insurance policy. The standard coverages for homeowners insurance are generally the same in all states.
Why do people not get home insurance?
Increasingly, Californians struggle to find private insurance to rebuild, in large part because no one wants to insure homes in the wildland urban interface zones — fire-prone areas where development abuts wildlands. How urgent is the insurance crisis and the wildfire risks that are driving it?
How much should you insure your home for?
Insure your house at 100% of its value, or purchase what is known as replacement or repair cost protection, which, for a fairly nominal fee, increases the payout you would receive for a total loss to your home by as much as 25% of the amount of your home's value as stated in your insurance policy.
What is the 50% rule in insurance?
In California's personal injury cases, the concept of 50/50 liability applies when both parties are equally responsible for an accident or incident. This shared responsibility is also referred to as equal fault or shared fault, and it falls under the broader category of comparative fault.
How do you know if you re paying too much homeowners insurance?
One big way to find out if you're being overcharged for your insurance is to look at what your policy covers. Your home insurance coverage will vary based on your location. But, if you have coverage for everything imaginable and there is a very low risk of it happening, this can drive your costs up.