While homeowners insurance is the most common type of insurance on the market, they don't cover everything. That's where different types of insurance come into play. These are a few types of insurance you might need when you buy a home:
Homeowners Insurance
Homeowners insurance protects your home, its contents, and other assets in the event of fire, theft, accidents, or other disasters. A standard homeowners insurance policy will provide coverage for costs related to:
- Damage to the interior and exterior of your home
- Loss or damage to personal belongings
- Personal liability for damage or injuries caused by you or your family
- Hotel or house rental while your home is being repaired
Mortgage Insurance
When a homebuyer has less than a 20% down payment to buy a house, they will typically pay mortgage insurance. The purpose of this type of insurance is to protect the lender in the event of a default on the loan. If a loan defaults, the lender must foreclose and then resell the house, typically at a lower price than before. The insurance would then pay the lender for their loss on the loan.
Flood Insurance
If your home is under a standard homeowners insurance policy, flood damage is likely not included. To cover your home and its contents for flood damage, you must purchase a separate flood insurance policy. Costs for flood insurance vary based on how much coverage you purchase, what the policy covers, and your property’s flood risk. In some cases, you may be required to purchase flood insurance by the government or your mortgage lender.
Most flood insurance policies are offered through the National Flood Insurance Policy (NFIP). However, some policies are sold through private insurance companies. To purchase a NFIP policy, your community must participate in the program.
Hazard Insurance
Hazard insurance is a term used to describe the coverage that homeowners insurance provides for certain risks. It covers structural damages from theft, storms, and fire. Though homeowners insurance typically helps cover damage from hazards, you can add optional coverages or endorsements, such as water damage from water backup from sewers or drains.
Are you considering purchasing a home? Give us a call today!
