Home Owner's Insurance

Unlike driving a car, there is no legal mandate that homeowner’s insurance is necessary.  However, if you are working with a lender, you will most likely be required to carry insurance to protect their investment and this will be a requirement of the loan.  Even if it is not, which is not likely, homeowner’s insurance provides valuable protection to the homeowner and nobody should be without it.  In case of damage, theft, destruction or accident, homeowner’s insurance can mean the difference between losing everything or significantly minimizing financial liability.

What Insurance is Available?

There are multiple areas of homeowner’s insurance and you should be familiar with each kind and how it pertains to your purchase.  You should check with your lender to assess the minimum requirements but also talk with an insurance representative regarding suggestions on additional insurance that may more fully protect your investment.  There are various deductible amounts and coverage available for each type.  Check with an insurance professional and your realtor for assistance in assessing your specific needs.  The types of insurance available are:

  • Title Insurance – If for some reason the property title proves invalid, the insurance covers the down payment amount as well s the mortgage amount.  This is purchased at closing for a one time fee.
  • Homeowner’s Insurance – Protects the home and its contents against damage, theft and liability.  Some property may not be covered or it may only cover limited amounts so it is important to have an idea of the value of the home and its contents.
  • Flood Insurance – This is not required unless the house is in a low lying area prone to flooding.  Basic homeowner’s insurance will typically not cover damage by floods.
  • Home Warranty – If purchasing a newly constructed home, there are warranties available incase something needs to be fixed after completion.  This will ensure completion of the repairs even if the contractor refuses to fix it or goes out of business.

Where to get Insurance

Check with your realtor to determine if they carry insurance policies or if they can recommend a good insurance broker.  A professional will help you decide on which coverage is needed, will explain the minimum coverage available and any endorsements for extra coverage that is recommended.  You should have your decisions made prior to closing on the house and all applicable policies, fees, deductibles and endorsements should be fully understood and agreed upon.

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