Consumers are increasingly choosing to buy the smallest possible amount of coverage.
When the vast majority of people purchase homes, they do so with a mortgage that requires them to carry a certain minimum amount of homeowners insurance coverage. That said, to an increasing degree, consumers are deciding to buy no more than the minimum allowable amount of coverage.
Property buyers are facing a rapidly growing total of costs, leaving little room for extras.
While homeowners insurance is required – and will provide exceptionally important coverage in the case of a catastrophe, helping to prevent financial ruin – consumers are finding themselves choosing to buy as little of it as they can in so that they will be able to continue to afford everything else they need to pay for each month.
With virtually all bills going steadily upward, from property taxes to food, fuel, electricity, water, and even the property purchase prices themselves, consumers aren’t exactly swimming in additional cash at the end of each month. With additional costs such as repairs and maintenance, many property owners are choosing to cut back on as much coverage as they can in order to save a bit of money and make their lives more affordable.
That said, carrying a minimum of homeowners insurance comes with its own risk of costly expenses.
As much as this trend is an understandable one, it is also one that comes with significant risk. The reason is that while consumers are saving money on their premiums each month, they’re counting on being able to avoid unexpected disasters that would require them to have to make a claim on their policies.
The reason this is concerning is that the smallest amount of coverage will mean that there will be either higher deductibles – the amount paid out of pocket before coverage kicks in – or smaller payouts, or both. Therefore, as long as absolutely nothing happens, property owners can save money each month. That said, if catastrophe strikes – the entire reason for the homeowners insurance in the first place – the costs the property owner must pay could be exponentially higher and harder to afford.