Homeowner Insurance

A condition of almost all home loan mortgage commitments is a homeowner insurance binder. An insurance binder is a letter of intent from an insurance company to issue insurance on a property. Most home loans will not close unless a homeowner’s insurance policy together with a paid receipt for the first year’s premium is brought to the closing or faxed to the mortgage underwriter prior to the issuing of the loan check and closing package being sent to the closing attorney. 

Homeowner Insurance – Flood Zone

When you find a home that you are interest in making an offer on it is a good idea to check out the flood insurance rate maps for your area to see if your homeowner insurance policy will require flood insurance. Just because you feel that the home is sitting in a high and dry location doesn’t mean that it is not located in a flood zone on the flood zone map. If your mortgage lender requires a flood insurance policy as a condition of your loan commitment then you will be required to get flood insurance and pay for the first year’s policy up front. If funds are tight this could be an added expense you are not budgeting for and could be a deal breaker. 

Homeowner Insurance-Rates

There are no hard and fast rates for homeowner insurance. The best advice is to shop around and then shop some more. Get lots of quotes, ask friends and relatives who they use and how the find their service. 

Homeowner Insurance-Deductable

If your lender will allow it consider raising the deductible on the homeowner insurance policy. A deductable is the amount of any claim which you will pay before the insurance company steps in. Basically speaking if there is a claim for say $2000 and your deductable is $500 then the insurance will issue you a check for $1500 to facilitate repairs. If you consider raising your deductable to say $1000 then the insurance company will issue a check for $1000 on a $2000 claim. From the insurance companies perspective a high deductable reduces the instances of nuisance claims. 

Buy Home and Auto Insurance Policy from Same Insurer 

If you buy your homeowners insurance policy form the same insurance company who holds your auto insurance policy you will most likely get a discount. 

Insurance and Credit Report

Although it seems inconceivable the reality is that insurance companies will take your credit status into account when deciding on a homeowner insurance rate to offer you. From a corporate perspective bad credit is a sign of untrustworthiness and a bad character. So if you default on your financial commitments to your bank, lender, Cell Phone Company or utility company they believe you are more likely to make frivolous claims and to be generally irresponsible. In short if your credit score is low you are considered a bad risk by insurance companies.