LOAN OFFICER / FAIRWAY HOME REPRESENTATIVE
HOME INSURANCE
Homeowners Insurance Facts
When you decide you want to buy your first home, homeowners insurance may not be the first thing you think about. However, most mortgage lenders require you to have homeowners insurance before they will approve your loan. There are a few things you should know about homeowners insurance.
Certain losses are excluded from most homeowners insurance policies. Standard homeowners insurance policies don’t cover floods or earthquakes. If you want coverage for flood or earthquake damage, you will need separate policies for those. If you are in a flood zone, your mortgage lender may require you to purchase flood insurance.
We all know that our credit score is important for many things. Did you know it can also affect your homeowners insurance premium? Some states have banned this practice; however, in most cases, your credit score can affect your insurance premium. The better your credit rating, the lower your premium. So while you’re spiffing up your credit rating to get a good deal on your mortgage loan, you should maintain a good rating to save money on your homeowners insurance.
Poor home maintenance may cause a claim to be denied. Not all damages are covered by homeowners insurance. If the damage that occurred to your home is due to your failure to properly maintain your home, your claim may be denied. When it comes to home maintenance, don’t be a procrastinator!
While you are living in your new home, you will acquire new valuables, personal possessions, and may do some home improvements.
You should always report these to us right away so we can ensure your coverage is sufficient for your investment. Enjoy your new home,
you deserve it! If you have any questions regarding homeowners insurance, please contact KoverageOne Insurance at (860) 541-5541
or online at KoverageOne Insurance.
Source: https://www.hsh.com/first-time-homebuyer/facts-about-home-insurance.html
A Loan Officer’s Guide to Understanding Home Insurance
As a loan officer, you play a crucial role in helping clients navigate the home-buying process. One important aspect that often gets overlooked is home insurance—yet it’s essential for protecting both the homeowner’s investment and the lender’s financial interest. Understanding home insurance can help you better guide your clients, ensuring a smooth loan process and avoiding potential roadblocks.
Why Home Insurance Matters in the Mortgage Process
Lenders require home insurance to safeguard their investment in case of unforeseen disasters like fires, storms, or theft. Before a mortgage can close, borrowers must secure a policy that meets the lender’s coverage requirements. If a borrower fails to maintain home insurance, the lender may need to implement force-placed insurance, which is often more expensive and provides limited coverage.
Key Components of Home Insurance
- Dwelling Coverage – Protects the structure of the home from covered risks like fire, wind, and vandalism.
- Personal Property Coverage – Covers belongings inside the home, such as furniture and electronics.
- Liability Protection – Provides coverage if someone is injured on the property and the homeowner is found responsible.
- Additional Living Expenses (ALE) – Helps pay for temporary housing if the home becomes uninhabitable due to a covered loss.
- Deductible – The amount the homeowner must pay out-of-pocket before the insurance policy kicks in.
Common Mistakes Borrowers Make with Home Insurance
- Underinsuring the Property – Some homeowners choose minimal coverage to save on premiums, but this could leave them financially exposed in the event of major damage.
- Not Understanding Policy Exclusions – Standard policies don’t cover floods or earthquakes. Borrowers may need additional policies depending on their location.
- Delaying Insurance Purchase – Clients should start shopping for home insurance early to avoid last-minute delays in the loan closing process.
How Loan Officers Can Help
- Educate Clients on Insurance Requirements – Ensure borrowers understand the minimum coverage needed to meet lender guidelines.
- Encourage Shopping Around – Recommend clients compare policies from multiple providers to find the best coverage at a competitive rate.
- Verify Proof of Insurance Early – Confirm that borrowers have an active policy before closing to prevent delays.
- Explain Escrow Accounts – If home insurance is included in escrow, help clients understand how their premium is paid through their mortgage.
Final Thoughts
Home insurance is a key part of the home-buying process, and as a loan officer, having a solid understanding of it can enhance your ability to assist clients. By guiding borrowers through their insurance options, you help ensure they are properly covered and prepared for homeownership.
If you have clients in need of expert home insurance advice, partnering with a trusted insurance provider can be a valuable resource. Reach out to learn more about how we can work together to support homeowners in protecting their investment!