Which Insurance Do You Need?

Home buyers are sometimes surprised to find out there's more than one type of home-related insurance. Here are the more common types of insurance products a home buyer is likely to encounter:

► Homeowners Insurance: Also called "hazard insurance"; it covers the dwelling and its contents for damage or loss resulting from events such as fire, wind, hail and theft. In most cases, it also protects the owner against claims by anyone injured on the property. Most homeowners’ insurance policies specifically exclude flood damage and limit the amount of coverage for items such as jewelry, antiques and collectibles. Additional "rider" policies may be purchased for items that exceed the maximum values of standard policy.

► Private Mortgage Insurance (PMI): Typically required by lenders to protect against default on loans for which the down payment is less than 20%. Usually, the PMI premium is paid a year in advanced at the settlement/closing, then monthly to the mortgage paydown reaches the 22% threshold (Under certain conditions, homeowner can request PMI cancelation when their equity reaches 20%)

►Title Insurance: Often required by lenders at the buyer's expense, title insurance protects the lender's interests against losses arising from claims on the property due to a defect in the title. Some buyers purchase title policies to protect their own interests, as well, should a claim on the home arise.

► Credit Life Insurance: Also called "mortgage life", this insurance pays off the remaining mortgage loan balance in the event the borrower dies due to reasons specified in the policy.

►Flood Insurance: Usually required by the lender if the property located within an area subject to periodic flooding. Home buyers may be able to obtain flood insurance through the National Flood Insurance Program (NFIP).
For specific insurance questions, contact your local insurance agent or broker.....