The first time people thought about property insurance, or what had the semblance of it, was in 1666, after the Great Fire of London had devoured approximately thirteen thousand houses in London. The effects of the fire were so dramatic that risk management as regards property became an absolute necessity. Though efforts to insure houses were initially futile, in 1681 the first home (or property) insurance company was founded.
As with everything, with time, insurance companies evolved to what we have today in the twenty-first century. Though the first records about insurance generally date back to the third and second millennium BC, the ideas it had then and now are pretty much the same ( risk management) but with more effective methods of execution.
If home insurance has been around for centuries , what then are home insurance pros and cons? Which outweighs the other, the pros or the cons? Are investments in home insurance worth it? Read through to find out. But first, what is insurance?
What is Insurance?
In a heartbeat, a general definition of insurance is a means of protection from financial loss. A more detailed definition according to Oxford is, “an arrangement by which a company or the state undertakes to provide a guarantee of compensation for specified loss, damage, illness, or death in return for payment of a specified premium.”
The Pros of Home Insurance
With a home insurance policy, your mind will always be at ease no matter what happens to your home. It gives you a certain security, a wave of relief that there is someone who would help you with all home related issues if such a need arises.
In a case of theft, vandalism, or natural disaster especially flood, a home insurance policy covers all of these things, making damage management easier for you as an insurance policy holder.
Say someone gets injured on your property or is involved in an accident on your property, there is a great probability that you will be held responsible for that accident. Home Insurance covers all forms of personal liability.
When you apply for a loan from a bank and your home serves as a mortgage, most banks require that your home is insured else your loan application will never be considered. Hence, a home insurance policy helps you stand a better chance for acquiring a loan.
Cons of Home Insurance
Asides the factors that affect the rate of insurance premiums ranging from state of residence, credit score, claims history, coverage amount, and the condition of the home, the only con that may be associated with investing in home insurance is choosing an insurance company that isn’t reputable. This is the more reason why one has to thoroughly research before choosing any insurance company.
Is home insurance worth it? Definitely. Does it have cons? Surely it does, but the pros outweigh the cons by far. Hence if you are looking for a healthy real estate investment, home insurance should be the first place you should look.