Does Home Insurance Have a Fixed Term?
Most home insurance policies are issued for fixed terms. “Fixed term” simply means a period of time, and it is the policy’s lifespan. If you’re a homeowner, you can opt to buy a home insurance policy with, for example, a fixed term of five, ten or twenty years. Most home insurance policies will be offered in comparable increments.
When you get fixed-term home insurance, you’re signing on to an insurance policy that requires you to make a premium payment for each year of your policy’s life. You can make this payment on an annual or monthly basis. In contrast to the fixed-term home insurance policy is perpetual home insurance. Perpetual home insurance is paid for as long as you want to pay it, and there’s no expiration date for the policy (as long as you make your premium payments regularly and on time).
Whether you opt for perpetual home insurance (which may or may not be available in your area) or a fixed-term home insurance policy, you will most likely be required to have it. Why? Because if you’ve got a mortgage loan – and the odds are that you do – your bank essentially owns your home until the loan is paid off, and while the bank owns your home they want it protected. Like perpetual home insurance, fixed-term home insurance will most likely not cover major “acts of nature,” such as earthquakes and tornadoes and the like. In order to protect your home from such destructive events, you need to explore the many various home insurance riders (supplemental insurance policies) available.
Your home might very well be the most expensive thing that you own, so that means it should be properly protected. Before you purchase a home insurance policy, whether it’s fixed term or perpetual, be sure to consult with a home insurance expert. He or she can walk you through the ins and outs of your home insurance options, and help to ensure that you get the right policy coverage for your needs.