Your mortgage company
has a vested interest in making sure that you have insurance for your
new home. They need to know that their investment has been safeguarded
so that if your home is destroyed by fire six months after the closing,
you will be able to either rebuild or repay the loan. For this reason,
you will have to provide them with proof of insurance prior to your closing.
insure your home and other structures on your property (e.g., a detached
garage, shed, etc.) against loss or damage. This does not apply to structures
used for business purposes (e.g., a garage used as a body shop) or rented
to other parties. The policies also protect personal property in your
home, although items of special value (e.g., expensive jewelry or furs)
may require additional "riders" in order to be covered.
Your homeowner’s policy
will also include liability insurance. If a friend falls down your stairs
and breaks his leg, your liability insurance will cover the medical expenses
and any legal liability you incur for bodily injury (up to the limits
of the policy).
Like other insurance
policies, your homeowner’s policy will have a deductible (the amount you
have to pay before you insurance coverage will begin). The lower your
deductible, the higher your premiums will be.
typically covers loss or damage caused by
- Fire or lightning
- Ice, snow or sleet
- An explosion
- Aircraft and other
- Wind or hail
- Theft or vandalism
- Riot or civil commotion
- Frozen or broken
heating and cooling systems
- Falling objects
Such policies generally
don’t cover damage caused by
- A flood or underground
- Earthquakes or
- Settling or deteriorating
- Birds, rodents,
insects or domestic animals.
on "Buying Your First Home"