I just purchased a $50,000 home. Do I really need a homeowners policy?

Even if you have 50 thousand in the bank to replace your current home with if it is destroyed, you have to consider whether you really want to spend that much money out of pocket suddenly. With home insurance, you pay regular premiums over a period of time, and most home owners never pay anything close to the value of their homes without making a claim against the policy.

And the home is not your only consideration, or even close to it. You also have to consider the liability of home ownership, where someone who enters the property is injured, or even when a tree falls in the night and destroys your neighbor's garage and both cars. Even with liability insurance, the final costs of serious damages or injuries can be a burden on the owner's finances.

The home might be valued at $50K, but could you rebuild it for that amount? Even as home prices have tumbled over the last few years, the cost of building materials has continued to rise steadily. The result is that your $50,000 home may cost $100,000 or more to rebuild, and that is a large chunk of money. Not to mention that your homeowners insurance also covers other structures on the property, such as your pump and well house, carport, swing set, or other items outside the home.

But look inside the home for yet another reason why you need insurance. Your personal property is probably values in the thousands of dollars, and it would be covered by home insurance. Everything from your linen to your jewelry, appliances to your washer, it is all part of the personal property coverage in a standard home insurance policy. Make sure you have a home inventory to back up any future claims, but you are otherwise protected.

Finally, what if your home is damaged or destroyed and you have to stay somewhere? A standard home insurance policy includes coverage for the loss of use of your home and property. If your washer is destroyed by a fallen tree, you can get reimbursed for the cost of taking it to a laundry. The same is true for your meals and lodging. A home insurance policy provides a lot of coverage for things other than the home itself, and the cost of not having a policy could quickly drag you into financial ruin.

Read on to find ways to save money on homeowners insurance.