Whether you like it or not, you will have to get homeowners insurance if you are getting a mortgage. What if something happened to your new home? Well, if you have insurance, you get money to repair or rebuild depending on the nature of the misfortune. Without insurance, you are out of luck… The mortgage company requires that you have insurance to protect their investment in your home. They want to be able to get their money back if the home burns down too. After all, it is their investment.
Here are some things you should know about a homeowners insurance policy. For instance, what does it cover? In general, your policy will cover the repair costs to fix or rebuild your home (and even structures on your property like a shed or detached garage) in the case of some catastrophe, or peril. Some perils covered are a fire in your home, water damage from a broken water pipe in a bath or kitchen, damage due to a fallen tree, or even wind damage.
Be careful, though…many homeowners policies do not cover losses due to flooding, especially if you live in a flood plain. Many natural disasters or catastrophes are only covered with additional policies. If this is your first mortgage policy, the mortgage company should tell you what type they need.
Here’s a bonus- your policy will cover most of the personal items in your home ( not including cash, jewelry, furs, personal papers). Ask your insurance carrier exactly what is covered. While you are at it, ask about Personal Injury coverage too.
What is personal injury coverage? It protects you against any personal injury claims like if someone slips and falls on your property. And , in the case of liability, members of your household can be covered even if they are away from your home.
Most importantly- ask your insurance carrier lots of questions, because you do not want to hear them say, “Sorry that is not covered” after something happens to your home, or personal items, etc. Here’s a tip- You should also touch base with your insurance company at least annually to review your policy coverage to make sure you are fully covered. In this case, surprises are not good.
