Homeowner’s insurance provides coverage for your home and possessions in the event of a covered loss. When it comes to policy, a minimum amount of coverage is normally required by finance companies before a home loan is finalized. There are other things to consider when it comes to basic requirements for home insurance depending on state or city regulations.
Protecting the lender
When you obtain a mortgage to purchase a home, the lender will have basic requirements for an insurance policy to protect the investment the company has made. Without this insurance, if your house is destroyed, you are still liable for the loan but have no financial reimbursement to cover the loan. You would be without a home and still have an outstanding mortgage.
The basic requirements for home insurance will include protection from losses due to fire and storm damage. Basic coverage does not always include all events of nature. In certain areas, you may be required to have an additional policy for flood or earthquake related damages.
Some mortgage lenders will set requirements for the maximum amount of your deductible on your policy. This can be based on your income to debt ratio. Lenders may also require a set amount of liability coverage in the event someone is injured on your property.
Some states or individual cities have basic requirements in place for homeowners or renters when it comes to certain pets. If you are the owner of an animal that is classified as dangerous, you may be required to have carry liability insurance. Even without this requirement, it is wise to check your policy to determine your coverage. Some policies may not provide liability protection due to injuries caused by pets.
Additional considerations for home insurance
Even if you own your home with no mortgage, you should have a basic homeowners policy. The insurance will protect your investment. If you do not have a mortgage, you may consider having a higher deductible for covered losses. You still want to be financially protected in the event that your house or the contents are destroyed.
As people get older, their car insurance needs may change. When considering car insurance for senior citizens, you will need to take into account any health problems they may have, how much they drive their car and where they live. Since the insurance company may have different requirements for seniors, you will need to look at the policies carefully and make sure there is an adequate amount of coverage.
Senior citizens sometimes experience failing eyesight or hearing which could affect their insurance premium. If you know your loved one has a problem seeing or maybe just shouldn’t drive at night, make sure her insurance policy carries enough protection to take care of expenses in the event of an accident. You also need to consider how much the senior drives his car. If he really doesn’t drive often, but usually catches rides with friends and family, he probably will not need as much car insurance. Where the senior citizens live should also be considered. If they live in a nursing home or assisted living that provides transportation to most places, the requirements for car insurance coverage will not be as great. When comparing policies for seniors, think about how much coverage the person actually needs and make sure the policy fits the situation.
Car insurance coverage requirement vary from state to state and from situation to situation. As people get older, they may choose to drive less and in effect need less coverage. Or they could continue to drive, even when they shouldn’t, which would require more protection to take care of expenses if an accident occurred. The best way to make sure you have the coverage you need is to compare quotes with multiple providers and find the protection you need for the price you want to pay.
If you are shopping for Texas homeowners insurance for the first time, you may be wondering what information you need to start speaking to an agent or doing online research. Below is a list of the information you’ll most likely need when getting ready to obtain homeowners insurance:
- The county and zip code in which you live. Homeowners insurance policy rates and coverage can vary depending on where you live.
- How many (if any) homeowners insurance claims you’ve filed within the past few years and for what. How many years can vary between companies. Some only go back three years, others may go back as many as five. In addition, the number of years since the claim may vary depending on the type of claim.
- Your credit rating. This can factor in on your premium rate. If you’re not sure what your credit rating is, you may want to check that before you start shopping for insurance, so if there are any issues, you can clear them up so they won’t affect your credit rating or premium amount.
- Your coverage amount. How much coverage you want usually depends on your home’s value. You want enough coverage to replace it wholly or at least in a great part should it be totally destroyed.
- How old your home is and the construction materials in the building of it. Both of these can have an impact on your premium amount.
If the agent or company needs any more information, you’ll be asked to furnish it and given time to do so.
One of the chief requirements of closing the deal on a home mortgage is buying a home insurance policy. New home insurance doesn’t only benefit you, after all. The bank who’s financing your mortgage has a substantial stake in your home too, and taking measures to ensure that investment is is protected is one of their primary concerns.
What happens if I don’t get home insurance?
When it comes time to finalizing paperwork for your mortgage, the bank or lender will require you to provide proof that you’ve taken steps to insure your new home. In the event that you don’t secure new home insurance through the insurer of your choice, your mortgage company may do one of two things: hold up on closing until you’ve obtained an adequate insurance policy, or provide you with a policy of their own.
Is lender provided home insurance better?
In a word, no. The coverage you’ll get from a lender-provided home insurance policy will only differ from a policy you obtain on your own in out-of-pocket costs to you. Typically, the home insurance coverage that your mortgage company will purchase for you is far more costly than what you’ll be able to get on your own. Premiums are added to your monthly mortgage payment and could significantly raise the total amount of money you pay.