Why is home insurance required by mortgage companies?
My lender is requiring that I get home insurance. How is it helpful? Why do they require it?
“Lenders require home insurance because it protects your home. When a lender lets you borrow money for a home, the home is used as collateral. If your home is damaged or you default on your loan, lenders want to ensure they’ll be able to recover their losses and protect their investment. Lenders use this same idea for car insurance.
Home insurance is also beneficial to you. Beyond protecting your investment, homeowners insurance also provides other coverage. All homeowners policies also include coverage for:
- Other structures
- Personal property
- Loss of use
- Medical payments to others
You also have the option to add additional endorsements or coverages.
Without home insurance, you become personally responsible for your home and subsequent damages. You’re liable for all costs associated with an event that may damage your home. With home insurance, your insurance company takes on these risks and will provide you coverage should any of them occur.
While it is an extra cost every year or month, you could save thousands of dollars by insuring your home.
In some cases, you may also want to look into bundling home and auto insurance. If your current car insurance company doesn’t offer this, look into companies that do. Then, compare car insurance rates in just minutes with Jerry. Afterward, you can call them to add home insurance and save even more money.”
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