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Different Types of Home Owner Insurance

Many first-time home buyers find the different types of insurance confusing. It's easy to see why. One size does not fit all. With this in mind, read the following home owner's insurance tips and advice carefully.

When buying a house through financing, the lender will require certain forms of insurance.

Required Home Owner Coverages

  • Home owner's insurance - This is the most basic form of insurance for a home owner. Typically, it offers coverage for fire, theft, vandalism and liability. Note that floods and earthquakes are not covered under this type of insurance.

    It's important to carefully discuss what is and isn't covered with your insurance agent. This can help prevent unpleasant surprises later.

  • Title insurance - Offers protection against any lien or claim problems. Imagine the house's former owner purchases a fishing boat and uses his home as collateral. Later, it sinks; he decides to stop making payments; and all of this "slips" his mind while selling the house.

    Now here's the shocker: As the new owner, you may be responsible for his sunken schooner payments — unless you have title insurance. Now you see why it's required.

  • Private Mortgage Insurance (PMI) - This insurance protects lenders against loss if a borrower defaults. It's required if you're paying less than 20% for a typical home loan down payment with no government assistance. The amount is added into your monthly mortgage payments.

Home Buyer Tip

Get pre-approved before you make your first offer

Your negotiating power increases substantially when your financing is pre-approved. In fact, many sellers will not work with potential homebuyers unless they are pre-approved.

Get Started!