Buying a house is a process that requires many steps, and one step is getting home insurance. You probably will not be able to close on the property without it, which means you will need to purchase a plan before closing. Do you understand how to do this and why you need it? If not, continue reading this article to learn the basic facts about home insurance when buying a house.
Home Insurance Protects Your Investment
If you are buying your first home, you probably never had home insurance before. Therefore, you might wonder what it is for and why you need it. Home insurance is a plan that protects your house, which is a costly investment. If a peril destroys it, such as a fire or storm, you can file a claim to receive money from the insurance company. Buying homeowner's insurance is the only way you can protect your house and the things in it, and you need it for this reason.
Homeowner's Insurance Protects the Lender
The reason you cannot close on your home purchase without homeowner's insurance is that your lender also needs protection. Your lender issues you a loan for your home, and they can require certain things, such as home insurance. If you lost your home, you might stop paying your mortgage payments. If this happened, your lender would lose the money you owed. As a result, your lender will require that you have home insurance. If anything happens to your house while you have insurance, the insurance company would pay the lender the money to cover the balance you owed.
Features to Find in a Home Insurance Policy
Now that you understand why you need insurance for your home, you will need to find a policy. You can call one insurance company or many, and the goal is to find the best rates for the most coverage. Your policy should contain coverage for your structure and personal property. It should also include liability coverage and additional living expense coverage. When you call for a quote, you must give the agent all the details about the home, including its location and features.
After buying your policy, you will receive a document that shows that you have insurance. You will need to provide this document to your lender as proof of coverage. If you have any questions about purchasing a policy, contact a home insurance agent today.