Do you have homeowner’s insurance or do you have a mortgage insurance? Some people think these two insurances are one in the same. However, they are not! There are some major differences between a homeowner’s and a mortgage insurance policy. Some of the fundamental differences is that homeowner’s insurance protects the home and its contents. A mortgage insurance protects the lender in case the mortgage payment wasn’t paid or fully paid. To better understand what makes these two insurance policies different, InsureWise will define homeowner’s and mortgage insurance for better understanding.
Homeowners insurance is a type of property insurance that is designed to cover the cost of damages, theft, and loss due to an unforeseen event. Both the home and the contents inside the home is usually covered in a basic homeowners insurances policy. Homeowners insurance can also shield you in the event a lawsuit is filed against you if another person was injured on your property. Your Homeowner’s insurance will often cover the costs or loss of related expenses. Many Homeowner’s insurance policies provide coverage for:
• The Home’s Structure
• Personal Belongings
• Lawsuit Resulting in an Injury and Medical Expense of the Complainant
• Supplemental Living Expenses If your Home is Uninhabitable
There are limitations to every Homeowner’s insurance policy. For example some Homeowner’s insurance policies will not automatically have flood damage, mold, earthquake, landslide, overflow or sewer drain blockage coverage. You will need to look over your Homeowner’s insurance policy carefully to better know what is all covered in your personal policy. You can seek add-on policies or coverage such as flood damage insurance if desired.
Mortgage or also known as private mortgage insurance is very different. A mortgage insurance is a policy that is set in place to help the lender, bank, or mortgage company. If you do not pay your mortgage or pay the full mortgage, the mortgage insurance will pay lenders. The homeowner often has to pay a percentage or the total cost of the mortgage for the entire year. If the homeowner is not able to make the mortgage payment, the money paid to the mortgage insurance will then be given to the lender.
Are Both Mortgage & Homeowner’s Insurance Required?
Some states will require a homeowner to have Homeowner’s insurance, while the bank or lender will require the homeowner to have Homeowner’s insurance. In most cases, homeowners will need to have Homeowner’s insurance. However, it is not mandatory but highly encouraged in some states. Mortgage insurance is not a requirement. However, some lenders will make it part of their own policy that homeowners have a mortgage insurance. It will depend on where you go to get your loan for your home. If a lender does require you to get a mortgage insurance policy, often they are not permanent. Once you have paid a certain percentage of your loan, you can cancel your mortgage insurance.
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Hopefully there is more clarity when it comes to homeowner’s insurance and mortgage insurance. For quality insurance services and great coverage, contact InsureWise today or fill out this quick and easy quote form.