Required Insurance Coverage
It is important to know that State laws or mortgage lenders usually require consumers to carry insurance. You will need to carry insurance because it may be required by your state laws or if you have a mortgage loan lenders require you to insure the home. Depending upon what state you live in each state has laws that usually require consumers to carry liability insurance if you want to register a car. Also all mortgage lenders will require you to carry homeowner's insurance if you have a mortgage on your home.
Most states require you to have automobile liability insurance, so that if you injure a person or cause property damage in an accident there are funds to cover should you be responsible.
Mortgage lenders who provide mortgages want consumers to have homeowner's insurance that is at least enough coverage to pay the amount you owe on the mortgage. Mortgage lenders require you carry insurance so they will get repaid the amount consumers owe on their homes should the home be destroyed. When you have a mortgage loan you are using the home as collateral on the loan. Most consumers will have additional insurance to cover the value of the home and their own potential losses.
It is very important to make sure you are properly insured as well as you meet the insurance requirements by state law. You also want to have insurance to protect yourself against claims or possible lawsuits. When you purchase an insurance policy, you are paying money now to ensure against financial loss and to provide economic stability for your family.
Insurance is a contract with an insurance company that is willing to share in your risk. Insurance companies sell insurance policy's to you and other and are willing to commit to paying you or to pay on your behalf potential future claims. They do this because they are confident based on statistics that they can make loans or investments with the insurance premiums they collect to offset future claims and make a profit. The insurance premiums you pay are determined based on the level of risk that an insurance company thinks you are while taking into consideration them having to pay a claim. Most consumers purchase insurance to protect themselves against risk.