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About Buying

The Final Walkthrough

Unless you pay cash for your home, one of the requirements that will be made by your lender is proof of a valid homeowners insurance policy, secured before closing. This policy will protect both your investment as well as the lender's (and, in the beginning of the loan, the lenders investment in the total value of the home is much higher!) Here is a general overview of the protections offered by your Homeowners Insurance.

What do Policies Protect Against?

  • Casualty: The most common hazard insured against, of course, is damage due to fire. A homeowners policy may cover losses due to other hazards (for example, wind and hail) but it is important that you determine precisely what is--and is not--insured against. If you home is built in a flood-prone area, you must secure a separate flood policy.
  • Liability: This is to protect you against lawsuits resulting from injuries that occur to visitors or guests in your home. The cost for this coverage, to a large degree, is based on the limits (in dollars) of coverage. Secure as much as possible in order to protect your assets.
  • Personal Property: While the casualty or hazard insurance covers the rebuilding of the house structure, personal property coverage protects what is inside the home. Coverage here will vary widely, so it is important to be clear on exactly what the limits of the coverage are. Does, for example, it cover replacement cost of an item (its cost today) or is the value determined through its original cost or depreciation.

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