Insurance

When you buy a home, you are required to buy homeowners insurance and title insurance.  Homeowners insurance provides coverage in the event of damage to your property.  Title insurance protects against defects in title work and protects the title to your home.

Homeowners insurance is required prior to closing and your insurance agent will need information from you and your lender.  The cost will vary depending on where you live, how much your house is worth and what kind of coverage you want.  The deductible will also vary and will affect the price.  Contact your current agent or use the opportunity of a new home to compare other agents at the same time.  Make sure you give yourself enough time to get insurance prior to closing.   I will advise homebuyers to contact their agent soon after they have written a purchase agreement.  Usually it doesn't take long at all to get your insurance, but if there is something unique about your home, it may take longer.

Title insurance for the lender is required at closing, an owners policy is the buyer's choice.  The owners policy protects the buyer against defects in title.  Title insurance protects you from a loss that may have occurred in the past.  Examples of coverage include  invalid documents completed by an expired attorney, invalid deeds delivered after the death of the grantor, fraud, claims for unpaid estate inheritance and gift tax against prior owners, false impersonation of the true title holder of the property, forged documents, protection from financial loss due to demands charged against the title to your home covered by the policy, up to the cost of the title policy.

Homeowners insurance is paid for on an annual basis.  The cost may change every year and most people include the payment in their house payment as part of the escrow.  The homeowner pays 1/12 of the bill every month and when it is due, the mortgage company pays the premium out of the escrow account.

Owners title insurance is a one time fee as long as you own your home.  Lenders title insurance is purchased with each new mortgage.  The owners policy will vary depending on the price of the home and the amount of the mortgage.  It is not uncommon for the seller to provide an owners policy at closing.  If that happens, chances are good that you will need to provide an owners policy for your buyers when you sell your home.

I get asked a lot of questions about title insurance and if it is necessary, the best answer is it is a relatively cheap insurance that can protect your home as long as you own it.  I have it on my home and wouldn't buy a home without it.  As with any insurance, you hope you won't need it, but if you do need it, you will be glad you have it!

Leslie Vanderwerf, Advisors Mortgage - lvanderwerf@advisorsmtg.com - Website

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Comments

[properties philippines]

I am well informed in this sentences, "The owners policy protects the buyer against defects in title. Title insurance protects you from a loss that may have occurred in the past." Now I knew it. Thanks for the informative post.

-joicee-

[mca5516]

6 19 09 Title owners policy is falsely sold . I filed with $9000 title Owners policy from first American Title insurance co. in Los Angeles and Houston and was denied because insurance only covered events that occured and affected Title from the past. The current Title closing is not covered (when it was purchased). It must in the future be sold as "Past Title owners policy insurance" because it does not protect the title closing when it is purched. It is really only half the insurance product a buyer needs. I want Title insurance that protects the title transaction Im engaged in when it is sold to or bought for me as well the past. First American Title Corp. owes me $1.3 millon U.S. for deceptive titleing of an American Title insurance product that fails to protect the Title transaction in which it is purchased. They're Bastards. Honestly, mca5516@Yahoo

[houses for sale]

Great post! this information really help me to more understand the benefits of insurance. This information is very helpful. Keep posting.

-katty-