Homeowners insurance and title insurance are both meant to help protect the property in which you have made an investment. Although they both serve different purposes, they can both help to reimburse you against loss and may even be required if you hold a mortgage on the property. In this article, we will explain the basics of homeowners insurance and title insurance.
Homeowners Insurance: What It Covers
Homeowners insurance is meant to protect against physical damage that happens to your property, such as from a natural disaster, or physical damage that happens on your property to another person or their belongings. There are some things that may not be covered by certain policies, such as damage caused by an earthquake - for that you will have to take a completely separate policy. However, for the most part, homeowners insurance will cover you against most things that can happen to and on your property. If you are looking to get a mortgage, you should check to see what kind of homeowners insurance the company will require you to hold and if there are any additional policies you would have to take out for occurrences that are not covered under your general policy.
Homeowners Insurance: Types Of Coverage Available
There are around six different types of homeowners insurance to choose from, however, there are only two that are still available in most states and that would be suitable for those who are buying a new home. The first is a lower cost option that protects you against sixteen specified disasters. The second costs a little more and would protect the owner against everything that could happen to or on his property, unless it is specifically listed as something that is not covered. For those “extra” things you would have to take out a separate policy if you wanted protection against them. What is on that list varies according to company and region in which you live (for example, someone who lives in Kansas may be protected against earthquakes and someone who lives in California may not, because there is a much greater chance that the homeowner in California will have to file a claim). You the homeowner would have to decide, unless your mortgage company has specific requirements about which policy you must carry, if the cost of saving a few bucks each month is worth the risk of having to fix your home after a disaster or having a lawsuit on your hands if someone or their property is damaged on your property.
Title Insurance: What It Covers
Title insurance is meant to protect the actual title of your home and your property. This may be important because when you buy a home, your title may have been previously owned by many other people. Some of those people may have been less-than-honest and forged a signature or failed to pay their property taxes when the title was under their care. Title insurance will protect you from any mishaps that come about from something that went on before you owned the home, so that you are not stuck with someone else’s baggage. Most mortgage companies will require that you obtain title insurance.
Title Insurance: Types Of Coverage Available
There is one basic type of title insurance available which protects an individual from almost anything that happened to or with the title before they took out the policy. However, some companies may have small add-on policies for different things that are not covered, such as zoning violations that were made by someone who owned the property before you that you are now responsible for or a neighbor building on part of your property without you knowing. Check with the company you choose to find out if they have additional policies and what they cover.
What type of insurance you purchase is ultimately up to you and your mortgage company. Even if the mortgage company only has basic requirements, however, you should want to protect yourself as fully as possible. One overlooked circumstance could end up costing you tens of thousands of dollars.
