A home insurance policy is an insurance policy covering your physical home in the event of fire or other casualty, the contents of the home and other losses you may suffer due to destruction of the property, in whole or in part.
A home insurance policy is both an essential investment and a lender requirement if you are purchasing real estate. Fire, floods, hail storms, and theft are a reality every homeowner must consider and obtaining insurance to protect yourself in these events makes good financial sense.
There are a two types of home insurance policies available; the policy may pay up to the fair market value of the home that is determined at the time the policy is purchased OR the policy may pay the full replacement cost of the home, if it needs to be rebuilt in whole or in part, whatever that may be at the time of replacement. Policy provisions may cover the contents of your home, including furniture, appliances, clothing, jewelry, and other property damaged or stolen.
A home owner’s insurance policy may also pay for the cost of renting another property in the event yours has been rendered uninhabitable through casualty. A policy may make requirements of the insured to retain coverage, for instance, a policy may require the home be occupied continuously for coverage, or the home only be vacant for a specified time, e.g. 30 days.
HOME INSURANCE POLICY AND MORTGAGES
Because a mortgage lender uses your home as security to repay the mortgage loan, a home insurance policy is required by all lenders. In addition, the mortgage holder may demand that they become a “loss payee” on the home insurance policy. This is to insure that the homeowner uses the insurance proceeds to restore the property to its original condition. A borrower will often be required to submit a policy or policy binder to the mortgage holder before the mortgage funds are released.
Often, the mortgage holder will be required to sign off on any insurance proceeds cheques and may send an employee or an appraiser to inspect the property to insure all repairs have been made. This is standard practice as the mortgage holder needs to ensure that the lending value of the property has been restored and that their security for the mortgage loan is equally as valuable as it was prior to the incident that caused insurance claim.
Here at First Foundation we like to offer a variety of services, in Edmonton, Calgary and throughout Alberta, to satisfy your personal financial needs. Through a partnership with First Foundation Insurance, an Alberta insurance company, we can provide our mortgage clients with excellent and well priced home insurance – contact our office for more information or check out our website to obtain a free quote.
If you are interested in learning more about home insurance policy, please feel free to contact us today!