No one would drive a car without
insurance, so it figures that no homeowner
should be without insurance.
What kind and how much?
There are various forms of insurance associated
with home ownership, including these major
types:
Title insurance: Purchased
with a one-time fee at closing, title insurance
protects owners in the event that title to
the property is found to be invalid. Coverage
includes "lenders" policies, which
protect buyers up to the mortgage value of
the property, and "owners" coverage,
which protects owners up to the purchase price.
In other words, "owners" coverage
protects both the mortgage amount and the
value of the down payment.
Homeowners' insurance: provides
fire, theft and liability coverage. Homeowners'
policies are required by lenders and often
cover a surprising number of items, including
in some cases such property as wedding rings,
furniture and home office equipment.
Flood insurance: Generally
required in high-risk flood-prone areas, this
insurance is issued by the federal government
and provides as much as $250,000 in coverage
for a single-family home plus $100,000 for
contents. Local REALTORSŪ can explain which
locations require such coverage.
Home warranties: With new
homes, buyers want assurance that if something
goes wrong after completion the builder will
be there to make repairs. But what if the
builder refuses to do the work or goes out
of business?
Home warranties bought from third parties
by home builders are generally designed to
provide several forms of protection: workmanship
for the first year, mechanical problems such
as plumbing and wiring for the first two years,
and structural defects for up to 10 years.
Home warranties for existing homes are typically
one-year service agreements purchased by sellers.
In the event of a covered defect or breakdown,
the warranty firm will step in and make the
repair or cover its cost.
Insurance policies and warranties have limitations
and individual programs have different levels
of coverage, deductibles and costs. For details,
speak with REALTORSŪ, insurance brokers and
home builders.
How do you get insurance?
The time to obtain insurance and warranty
coverage is before closing, so speak with
a REALTORŪ or insurance broker prior to closing.
Be sure to ask about limitations, costs, deductibles
and "endorsements" (additional forms
of coverage that may be available.
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