As any home owner can attest, it is impossible to get a mortgage without evidence that the property is properly insured. In most cases, this means a homeowner's policy is in place in case of fire or storm damage. Since the subject property is the bank's collateral, the lender has a vested interest in making sure it has sufficient coverage relative to home value. If the house sits in a flood zone, the mortgagee will require flood insurance, as well. Yet the lender looks out for its own interests. Could there be insurance products that are well worth having regardless of the bank's indifference?
Flood Insurance
Often, banks and other mortgage lenders rely on flood zone determinations issued by the Federal Emergency Management Agency (FEMA) in order to decide whether flood insurance is mandatory for a borrower. Yet there are times when a flood policy is advisable even if the property falls outside of a flood zone. The hard fact is that FEMA designates areas as high risk flood zones based on historical information. All it takes is one flood event and a low-risk spot becomes high-risk. Owners do well to consider the elevation and topography around the house before ruling out a flood policy.
Umbrella Policy
Regarding umbrella insurance, every owner must make a judgment call relative to the neighborhood, their real property and their own financial assets. Homeowner's policies provide for a certain level of liability in case of an accident or injury on the property. Sometimes, however, it does not come close to the legal damages sought. Umbrella policies provide an additional layer of liability protection in the event of an unfortunate occurrence. They not only address personal injuries, but losses regarding personal possessions, as well. In general, the premiums are rarely high for umbrella insurance coverage.
Earthquake Insurance
The very nature of insurance is protection against risk. When the risk is high, insurance is advisable, mortgagee requirements notwithstanding. Determine the risk against home value. In California, earthquake insurance might make more sense than in Delaware, for example. Few know, nevertheless, that the First State has experienced 58 earthquakes since 1879. They are not unheard of. Knowing that homeowner's policies do not pay claims on earthquake damage, it is not a bad idea to visit the website of the U.S. Geological Survey to get a history of tremor activity in the area where you live.
Personal Property
While most homeowner's policies cover personal belongings within the dwelling -- e.g. furniture, clothing, computers and devices -- each policy has limits in terms of what it pays out for these items. For those who are particular, additional personal property coverage may be a wise avenue to traverse. At any rate, a thorough review of the homeowner's policy declarations regarding personal property should precede any decision in that regard. Sometimes, homeowner's policies put a cap on jewelry, for instance. Appraising such valuables can help you decide whether supplemental personal property insurance is warranted.
Landlord Insurance
For those who live in and own a two to four family home -- or other multi-unit structure with tenants -- landlord insurance protects owners from legal action by their lessees. Meanwhile, it provides compensation for any personal possessions that are used to service the property, such as snowblowers, lawn mowers, power washers etc. It does not cover any personal property for tenants, who must themselves purchase renter's insurance. All in all, owners should size up tenants carefully and prepare scrupulous leases to minimize legal action by renters. A landlord policy could not hurt either.
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