Making the last payment on your mortgage loan is an exciting event that calls for celebration. After all, it takes most people 30 years to do this, so you should be excited when this day comes. When this happens, you might also start thinking about whether or not you should continue carrying homeowner's insurance on your house, simply because you will no longer have a lender requiring this. While you are not legally bound to have insurance on your house after paying it off, there are some pretty good reasons to keep it.

Your Home Is an Investment

Paying for a home often takes many decades, and each year you are building equity in your house. When you make your last payment, you will fully own the house, and you can do with it what you want. Your house is an investment you have spent years paying into, so why would you instantly remove your insurance coverage from it after you pay it off? If you do this and you lose your entire home to a fire or storm, you would lose your entire investment you worked so hard for. This is the main reason you should continue carrying homeowner's insurance on your house even after you pay it off.

Homeowner's Insurance Protects You from Lawsuits

A second important thing to understand is that homeowner's insurance does not only protect your home and the things in it; it also protects you from lawsuits. Part of your home insurance coverage is liability insurance. This is something that is essential to have if you own a house or assets. The purpose of liability insurance is to cover the costs of lawsuits that arise from injuries that occur on your property. For example, suppose a mailman tripped over a log on your sidewalk while delivering your mail. This mailman could sue you for damages, because it happened at your house. If you have home insurance, you could submit the claim to your insurance company, and you would be protected.

Without home insurance, the mailman could sue you for the damages, and you would have to pay for the costs out of your pocket. If the injuries were severe enough, you could lose everything you own.

Having insurance on your house is always a necessity, whether you have a loan or not; however, you might want to change the coverage amounts or deductible on it after you pay off your loan. To learn more, contact a homeowner's insurance services agency today.