Insurance protects the named insured from specified losses. Mortgage Lender require to be named as "additional named insures or loss payee" to insure the mortgage is paid in case of total loss.
Lenders require that borrowers maintain hazard insurance equal or higher than their loan amount to protect the lender interest in the home case of disaster. Lenders also may have other requirements dealing with hazard insurance for example a maximum deductible.
If you allow your insurance to lapse the lender will put in force there own insurance policy. These policies are generally more expensive then your standard 3rd party insurance policy.
Hazard Insurance is the same thing as Home Owner's Insurance
When choosing which insurance company to use, look into the company you use for other insurance, like auto insurance. You will sometimes find a discount for having both your home and auto with the same company.
You standard policy will also protect against personal property located in the home in the event of a disaster or mishap. There are limitations as to how much they will cover so check your policy to see how much coverage you have.
Before an mortgage can be approved, an insurance BINDER must be acquired from an insurance company and submitted with the final loan application to the lender. The binder must state specific information about coverage based on the lenders requirements.
Insurance that covers property damage caused by natural (wind, storm, hurricanes, earthquake, tornado) or unnatural cause (fire, personal accident). Check with your Insurance Company to make sure Earthquake or and flood is covered for your home. This coverage is not always included. You can also check with your local government planner to find out what type of flood zone your property is in. Tip: Check with your local government planner yearly to see if your zone has been re-zoned to either a lower grade which might SAVE YOU MONEY. Ask a Mortgage Professional to help you if you think you can save money.
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