You might not even suspect how many types of insurances exist to protect your home until you are purchasing your first property. This can certainly be overwhelming, but to help you out we’ve compiled a list of the most common types of home-related insurance you should know about.
The most common type of home-related insurance is, of course, homeowners insurance. Homeowners insurance is a mandatory expense you need to take into account when budgeting your home expenses.
It will serve two purposes: Protect your assets and satisfy your mortgage lender. Homeowners insurance covers the structure of your home and your personal property, as well as your personal legal responsibility for injuries to others or their property while they’re on your property. Also, most mortgage lenders require you to have insurance as long as you have a mortgage and to list them as the mortgagee on the policy.
Within homeowners insurance, there are several types of packages to consider such as:
- Dwelling – which pays for damage to your house and to structures attached to your house including damage to fixtures, plumbing, electrical wiring, heating and permanently installed air-conditioning systems.
- Other Structures – Pays for damage to fences, tool sheds, free standing garages,
guest cottages and other structures not attached to your house.
- Personal Property – Protects your possessions, including furniture, electronics, appliances and clothing.
- Loss of Use – Covers living expenses while your home is being repaired.
- Personal Liability –Covers your financial loss if you are sued and found legally responsible for injuries or damages to someone else.
- Medical Payments –Pays medical bills for people hurt on your property or by your pets.
Private Mortgage Insurance (PMI)
If your down payment is less than 20% of the home’s purchase price, your lender might require PMI. This type of insurance protects the lender if you default on your mortgage and the premium is often included in your monthly mortgage payment.
During the home buying process, there are so many things going on that you might not notice that there is an error in the title. This type of insurance protects you and the lender against any monetary loss due to errors in the title. You usually pay for title insurance as a one-time fee when you buy a home.
Of limited scope, a home warranty covers the mechanical breakdown of specific parts of your home, such as the electrical and plumbing systems. It does not cover the home’s structure,
may or may not cover appliances, ends at a specific point in time and have exclusions and limitations that you should review.
Many new homeowners are shocked to learn that homeowners insurance does not cover flooding. Flood insurance is a separate insurance policy that might be mandatory depending on where you live and flood risk. It’s always a good idea to protect your home against floods since these can happen anywhere, at any time.
We can help you figure out if you need flood insurance and make sure you get the best rates for your home. Contact us today!