Home Insurance Essentials: Protect Your Home and Meet Lender Requirements
Home Insurance Overview:
Home insurance, also called homeowners or hazard insurance, covers losses and damages to your private residence and its contents, such as furniture, valuables, clothes, and electronics. The coverage amount depends on the type of policy you buy, its liability limits, your deductible, property value, and other factors.
Determining Coverage Needs:
Deciding how much home insurance you need may require help from your insurance company or agent. Start by taking inventory of your belongings and estimating their value to ensure adequate coverage. Ensure your liability coverage is enough to protect your total assets, especially if you have extra risks like a pool or trampoline. Additionally, coverage for lodging, meals, and pet boarding can be crucial if a disaster makes your home uninhabitable.
Key Coverage for Lenders:
The most important coverage for lenders is Dwelling Coverage. Your policy limits are based on this, with other coverages calculated as percentages of your dwelling limit. BankSouth Mortgage requires 100% replacement cost coverage. We also require no Peril Exclusions for:
- Fire or Lightning
- Explosion
- Windstorm (including named storms)
- Hail
- Smoke
- Aircraft
- Vehicles
- Riot or Civil Commotion
If your policy excludes any of these, you’ll need a separate policy. Homes in high-risk zones for flooding, earthquakes, or hurricanes may require additional insurance.
Condo and Co-op Units:
If you are purchasing a condo or co-op unit, common areas are typically covered by a Master Insurance policy. However, the interior of your unit may not be covered by the master policy. You’ll need a condo (HO6) insurance policy with sufficient walls-in Dwelling Coverage, and we’ll review the Master Policy to ensure sufficient coverage.
Timing and Complexity of Insurance Quotes:
Given the complexity of insurance products and regulatory requirements, obtaining an insurance quote takes longer than it used to. Start researching insurance companies as soon as you go under contract to ensure you meet all requirements in a timely manner and avoid any delays in closing.
Navigating the requirements for homeowners’ insurance can be complex, but understanding what lenders expect can simplify the process. By securing the right coverage, you protect your home and investment, ensuring peace of mind. Start early, ask questions, and work closely with your insurance agent to find the best policy for your needs.
The BankSouth Mortgage Advantage:
Experience the speed of ReadyApprove from BankSouth Mortgage, where you can secure conditional approval for conforming loan limits within hours. You’ll be armed with the confidence to quickly submit an offer, and the seller will see you as a serious, prepared buyer. Have peace of mind with our FREE one-time rate float-down and no lender fee refinance options!
Take advantage of our Buy Now, Refinance Later with a No Lender Fee Refinance* option for buyers who are purchasing currently at increased interest rates. Homebuyers who started their loan application with BankSouth Mortgage on or after June 15th, 2023, and close their loan with BankSouth Mortgage will be eligible for exclusive savings. Available on primary residence only and must be used within 60 months of the close date.
*Must refinance after 6 months from the 1st payment date and within 5 years of the close date. Available for new applications on or after 6/15/2023. Subject to credit and property approval. Additional conditions may apply. Terms are subject to change. “No Lender Fees” only apply to origination charges.
Blog post date: Thursday, July 19, 2024
