What Can Happen With No Homeowners Insurance?

In certain circumstances, it may be possible for you to go without homeowners insurance. This would be the case if you do not have a mortgage and own the home outright. It might be tempting to go without insurance if you live in an area where premiums have gone up significantly. However, the consequences of being without homeowners insurance could be severe.

Mortgaged Homes

If you have a mortgage on your home, you need homeowners insurance as a condition of that loan. This is the way that the lender protects the investment that it has in your property. If you were to suffer a catastrophic loss of the home, the lender could recoup the value of the loan from an insurance claim. In this case, you have no choice about taking out and renewing your homeowners insurance. If you fail to renew, the mortgage holder will be notified and will likely instate its own insurance, which could be significantly more expensive than a policy you obtain in the open market.

Catastrophic Loss

If you own your home outright and choose to go without homeowners insurance, you are running the risk of suffering a total loss of what is probably your biggest financial asset. If you home is destroyed in a fire, hurricane or earthquake, you will be left homeless and will have to deal with the consequences of the complete loss of an asset that was probably worth hundreds of thousands of dollars.


If someone slips and falls on your property or injures himself in some other way, you might be left liable for huge medical bills. Homeowner policies cover such liability claims and would foot at least most of the bill for a lawsuit involving an injury on your property. If you have no insurance, you could potentially be liable for millions of dollars in medical bills and damages.

Theft and Smaller Claims

Your homeowners insurance also covers the contents of your home — your personal possessions. If you don’t have a policy and you are the victim of a burglary, you will have to write off the value of anything that’s stolen. If you have smaller repair issues, short of the destruction of the home, you will also have to foot the bill for these issues yourself.

Financial Consequences

If you drop your homeowner policy and then later want to get back into the market and buy another policy, you may find this difficult. Most insurers are suspicious of homeowners who drop coverage. They may refuse to insure you; or if you are offered a policy, it may be at a significantly higher premium than you were paying before because companies will view you as a greater risk. Not carrying homeowners insurance if you own a home can also be a red flag on your credit and can affect your credit score.