Home Design Idea from WorldLand

A homeowners policy protects the homeowner if the home is damaged or destroyed in a variety of ways, as stated in the policy. A buyer is required to have homeowners insurance while there is a mortgage balance to be paid off. If you have a single-family home, your mortgage lender requires you to have an HO-3 policy—which offers the broadest coverage of any of the homeowners policies—in force during the entire term of the loan.

In fact, homeowners insurance is so important that lenders on many loans require borrowers to make monthly payments into an escrow account to pay the premiums when they come due each year, just as they do real estate taxes. This is to ensure that the bank’s investment—your home—is protected against loss.

Typically, a homeowners policy covers the home, its contents, and any liability if someone gets hurt on your property. It also covers water damage from plumbing failures inside the home, but not from damage caused by water from an outside source, such as a flood.

For coverage of damage caused by exterior water, you need a separate flood insurance policy sold only by the U.S. government. For condo, co-op, and townhouse owners, lenders require HO-6 policies, which cover the unit’s interior, its contents, and any liability for injuries incurred in the unit. The building’s exterior, grounds, and general liability are covered by a master policy that insures the whole complex.

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