When you buy a home, there are a few key players involved in the transaction: you, the real estate agent, and your mortgage lender. All three work towards a favorable outcome, however, play significantly different roles when it comes to homeowners insurance.
What role does your real estate agent play in homeowners insurance?
Contrary to popular belief, real estate agents have very little involvement with the process of obtaining insurance. The real estate agent helps to secure properties within your budget and location, but once you purchase the property, they have very little involvement. If you are looking for quality homeowners insurance, you will need to work with your mortgage lender and an insurance agent. Mortgage lenders require homeowners insurance for all clients. It’s a requirement that’s beneficial for both parties because it protects you from damaged property and the mortgage lender from losing its asset.
Why do mortgage lenders require home insurance?
Finding a mortgage lender who doesn’t require an insurance policy on your home is difficult. Most mortgage lenders need you to have home insurance as long as you have a mortgage and they are listed as the mortgagee on the policy. This policy is designed to protect their interests in letting you purchase a home with their services and there happens to be a fire, flooding, or external damage to the house.
On the off chance your insurance lapses, your lender will likely have your home insured through their policy which tends to be much higher. That’s why shopping for your own plan saves you money long-term.
How to pick an insurance agency for homeowners insurance.
When you shop for insurance for your home, you should check that their coverage meets the needs of your mortgage lender. Often, lenders require policies to meet a maximum deductible and a minimum amount of coverage. Once you’ve obtained this information, you can start shopping for comparable prices.
If you are looking for cost-saving ideas, speak with the insurance agency you have for your car. Discounts are often given when you purchase insurance policies in bundles. Don’t stop there though, as rates do vary, as well as, the quality and strength and services offered by each insurance company.
What you need to look for when choosing a homeowners policy.
Insurers look at the cost of replacement, not the market value.
In the instance your home burns to the ground or is externally damaged by other factors, your agency pays what it needs to replace the house, not its estimated value.
Don’t ignore flood damage.
Often homeowners skip this when choosing home insurance thinking it won’t happen to them. Even if you live in an area with low risk of flooding, there is the potential issue of your pipes, pump, or sewer leaking and causing water damage. Make sure your policy covers the cost of these repairs.
Not all policies are created the same.
Don’t shop for policies like you would for a pair of shoes. You’re not out to get the best deal; you want comprehensive coverage at a reasonable cost. Take time to speak with your insurance agent on the details of your policy and don’t worry if it’s a laundry list. This coverage is designed to protect your most expensive and personable belongings, and you need to know how it will benefit you.
Preventative actions can reduces premiums.
Insurance agencies price your premium based on how risky your situation may seem. Some agencies, however, reward homeowners who take preventative measures to ensure their home is in great working order; think working smoke detectors, burglar alarm, or a deadbolt.
For a free home insurance quote or to review your existing policy with one of our agents, Contact Royce Williams Insurance today!
