Do I have to keep insurance if I bought a house with cash?

I paid cash for an old house that needed a bunch of work done, in a pretty cheap area. So I don't have a mortgage, the house isn't big or fancy and still needs work, but it's livable and everything. I don't have a lot of stuff I'd need to protect financially, and since I don't have a lender, do I actually need to have a certain home insurance amount? Can anyone make you have home insurance if you pay cash?

Without a mortgage, nobody is requiring you to carry homeowners insurance, and that's a nice freedom to have. That said, choosing to go without it on a property you're actively investing in is a risk worth careful consideration.

Technically, unlike auto insurance, the state doesn't require you to carry a certain minimum on your home either. So while you've got the choice, I'd strongly recommend carrying insurance on any property you own, even a paid-off one.

If you were to lose everything in a fire or tornado and didn't have coverage, your hard work making that house a home would be gone, and so would everything inside it. Even if your belongings aren't high-end, replacing the basics after a total loss adds up faster than most people expect.

One big piece of this is liability. If anyone is hurt on your property, you could be sued. This is especially true during active renovation work: anytime you have contractors, handymen, or even friends and family helping out, your liability exposure goes up significantly, and that's exactly when you want coverage in place. Nobody anticipates their friend filing a law suit when they offer to help on a project, but it happens.

As for keeping costs manageable, there are different standard home insurance policy forms worth understanding. An HO-2 is more basic than an HO-3 or HO-5, and the cost difference can be meaningful. An HO-2 may give you enough peace of mind for where you are right now, depending on your comfort level with risk. You might also consider actual cash value coverage rather than replacement cost: ACV pays out what your belongings are worth today after depreciation, rather than what it would cost to replace them brand new, which can lower your premium noticeably.

One important thing to ask your insurer about: if the home is actively under renovation, a standard policy may not fully cover it. Some insurers require a dwelling under construction or vacant home policy in certain situations, so it's worth having that conversation before you sign anything.

The bottom line is that skipping coverage altogether isn't worth the risk, especially right now when you're actively investing time and money into the property. Getting a quote costs nothing, and you might be surprised how affordable basic coverage can be.