Sheila and I have started to figure out what we need to do to get out of the apartment that we are in and buy a small house. We are working on a check list after talking to various people about the process. Obviously the first thing is to come up with enough money for a down payment. That is not easy for us, but we are getting close to what we think we need if the house is small. Apparently we also need to get home insurance quotes, at least that is the case if you need to borrow money from a bank. They are looking after their own interests and they expect that you will need to have insurance to make sure that you can pay them back. It makes a whole lot of sense if you are a bank.
You can imagine what might happen if someone bought a house with no insurance on it and it was destroyed. If you owe a hundred thousand dollars on a pile of rubble you are going to want to default on the loan rather than pay it back. If you got insurance, then the whole thing works out for every one involved. The insurance company would obviously rather not pay, but they are in the business of taking chances and they are going to make a lot of money so long as they do not have a wide area of desolation in which they have sold a lot of policies. For instance a lot of insurance companies take bad hits after really big hurricanes like Katrina. Obviously if you have a storm that only comes around every twenty five years that is going to hurt a lot of people and there are going to be more things to worry about than an insurance company’s bottom line.