I am often asked about the different types of insurances that surround real estate. And while I am no expert on the topic, I do feel qualified to give an overview and some insight to assist you in asking intelligent questions to true insurance professionals. So, here it goes:
- Homeowner’s Insurance covers the replacement cost of the home and is required by lenders to ensure that their collateral (the home) will be replaced in case of damage. The amount of the policy need not include the value of the land. There are variables in cost by company and by the amount of the deductible. Many people include riders to their homeowner’s policy for personal property (like jewelry) or get discounts because they tie it to their auto policies, etc. Recognize also that policies vary for owner occupied homes to second homes to vacation homes to investment properties.
- Flood Insurance is mandated by the Federal Government if your property is located in a Flood Zone. Flood Insurance Premiums are used to assist FEMA in rebuilding areas affected by flooding (like from a hurricane). Traditionally, “acts of God” have been excluded from many insurance policies. That was what forced the Flood Maps and mandatory coverages. (I imagine there is Tornado and Earthquake Insurance Policies as well, in areas where they are more likely.)
- Title Insurance is usually split into two policies – an Owner’s Policy and a Lender’s Policy. Both basically insure the same thing- that the owner of record is the rightful owner and that the liens of record (mortgages, for example) are the ones that everyone has agreed to. The title company searches the public records and certifies the title and the liens. Often, they clear prior liens and handle the transfer of ownership from seller to buyer with the County Clerk. Additionally, they provide information about real estate taxes, judgment and bankruptcy searches, and Certificates of Occupancy and Building Permits.
- Life and Disability Insurances are something to consider when you own a home. What if the worst case scenario happens? Depending on your age and health, the cost can be worth it. There are many types of life insurance (term vs. universal life insurance, for example) that can accomplish different goals from paying off your mortgage to planning for retirement. A strong life insurance professional is as important as a strong accountant. Cheapest is rarely best. Financially, many are covered in case of death but get crushed at times of disability. Investigate the cost….it usually makes good sense.
I expect today’s piece to get you thinking about what you must have and what you might consider for insurance. Just scratching the surface. Go get the recommendation of a professional. Check out cost, sure…but don’t lose sight of the concept of protecting your assets and your family.
— Reposted with permission of Keepin Current Matters
About The Staten Island Board of REALTORS® (SIBOR)
The Staten Island Board of REALTORS® (SIBOR) is the largest not-for-profit trade association in Staten Island, N.Y.
SIBOR exists to enhance the ability and opportunity of its members to conduct their business successfully and ethically; and to promote the preservation of the public’s right to own, transfer and use real property.
Comprised of over 1,800 members, SIBOR serves real estate agents, brokers and affiliated professionals throughout the borough and surrounding areas.
SIBOR is the provider of the Staten Island Multiple Listing Service (SIMLS), which works as a clearinghouse through which more than 250 local real estate firms exchange information on properties they have listed for sale. Together, its members participate in over 3,000 real estate transactions every year.
All SIBOR members belong to the New York State Association of REALTORS® (NYSAR) and the National Association of REALTORS® (NAR).
SIBOR may be reached at 718-928-3220 and visited online at http://siborrealtors.com/.