Homeowners Insurance

Homeowners Insurance

As you progress through the home buying process, you should be aware of the basic types of homeowners insurance. Please note that most policies contain standard exclusions and exceptions.

Required Insurance

Homeowners Insurance

Homeowners insurance covers fire, theft, certain natural disasters, and personal liability if someone is injured on your property. It also protects your lender against the loss of the property securing your mortgage. You'll have to prove you have adequate homeowners insurance coverage as a condition of obtaining a mortgage.

Title Insurance

When you buy a house, your lender will perform a title search to ensure the seller has a legal right to transfer ownership, and to see if there are liens or restrictions on the property. A lawyer, abstractor (a person who researches titles), or employee of the title company does the title search.

Title insurance provides protection against financial loss in case a defect in the title turns up at a future date.

Possible defects include:

• Flawed information in deeds or mortgages (e.g., incorrect name)
• Liens or claims against the property or property owner (e.g., unpaid taxes or utility bills)
• Claims to ownership from a former owner or spouse
• Invalid deeds from a past sale or transfer by a party who didn't legally own the property

Insurance That May Be Required

Private Mortgage Insurance

When you acquire a mortgage with less than a 20% down payment, we may require you to buy mortgage insurance. This coverage helps protect the lender in case you can't make your payments and default on the loan. Mortgage insurance may make it possible for people with small down payments to buy the home of their choice.

Flood Insurance

Flooding is not covered by a standard homeowners insurance policy. To determine if you need flood insurance, ask your insurance professional about the flood history in your area.

If there is a potential for flooding, you will be required to purchase a policy that covers the structure and your personal belongings. An escrow impound account will be required unless the home is covered by a flood insurance policy that is provided by a condominium association or homeowners association. The premium is paid by the association as a common expense.

Flood insurance can be purchased from an insurance agent or company under contract with the Federal Insurance and Mitigation Administration (FIMA), part of the Federal Emergency Management Agency (FEMA).

Optional Insurance

Mortgage Life Insurance

This coverage can reduce or pay off your mortgage balance in the event you die before the loan is repaid. This insurance can provide you and your loved ones peace of mind if they inherit your property.