which insurance is required when buying an home? building and contents both required?
i need help with home insurance?
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Visitor Stat
*Chantal+Rob*6.14.08*
April 18, 2010 at 8:08 am
The mortgage company is only going to care about the building and that the coverage is more than the amount of the loan.
Lisa
April 18, 2010 at 8:30 am
The mortgage company will just require coverage on the building itself, however all homeowners policies include contents coverage automatically. There are other policies such as a dwelling fire policy that will just cover the building, but these are usually more expensive then a homeowner policy.
c
April 18, 2010 at 9:14 am
When you have a mortgage on a house, you are requiered to have coverage for the dwelling, which is coverage A of a homeowners insurance policy. This is what guarantees the bank (lender) that they will get their money back in case of a total loss.
The coverage is requiered to be in the amount of replacement cost, and most lenders will also want you to have extended replacemet cost on the policy (125-150%). A comprehensive homeowners insurance policy will cover this, AND personal property coverage for your own belongings (contents). There are many other coverages which are part of this policy.
LISA is wrong (below). The dwelling fire policies are NOT more expensive than the homeowners insurance policies, since they dont cover vandalism,theft, burglary, water, extended replacement!!
Some lenders wont accept Dwelling Fire policies due to the exclusions.
Wendy S
April 18, 2010 at 9:21 am
It depends on the type of home you are buying.
If you are buying a house then the mortgage company is only going to care that the house itself is covered. All regular homeowners policies come with personal property/contents coverage, and it’s something you would want anyway.
Dwelling policies don’t have to include contents coverage, but the coverage is not as broad as a homeowners policy. The price can be higher or lower than homeowners, depending upon the companies you’re getting quotes from.
I definitely recommend the regular homeowners policy. Definitely.
If you are buying a condo or a townhouse the mortgage company may only require proof that the association covers the building, or they may also require that your carry your own unitowner policy to cover the parts of the building that the association doesn’t. That varies from lender to lender, but you really should get the unitowner policy regardless. These policies usually come with at least some personal property coverage, and you can add more.
In both cases you may also be required to carry separate flood insurance, hurricane insurance, earthquake insurance. It depends on the state in which you live, the exclusions on the homeowners policies and the requirements of your lender.
Good luck!
mbrcatz
April 18, 2010 at 10:06 am
NONE is required, unless you have a loan. If you DO have a loan, the LENDER will require you to insure the HOUSE. Not the contents, not liability, just the house.
HOWEVER. It’s much more expensive to insure just the house, than it is to buy the “homeowners package” policy. So, you can buy a $100,000 stand alone house policy, for about $1500, or for $500, you can get coverage for the house, plus contents, plus other structures, plus loss of use, plus liability, plus medical payments.
So people tend to buy the cheapest policy, with the most coverage – NOT the “minimum” policy to satisfy the requirements.
Kinda like, when you go to a restaurant, you buy the “dinner” package for $15, it includes rolls, salad, main course, maybe two vegetables and a starch side, salt & pepper, ketchup, etc. If you bought those ala carte, you’d pay a WHOLE bunch more. And if you say, well, I don’t WANT the ketchup, or I don’t WANT the roll, you don’t get a discount off the dinner price.
HOpe that helps.