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Real Estate Insurance
Written by Cathie Elliott
Clarke Agency Gunnison, Colorado
When you're buying a home, you are confronted with several types of insurance - some mandatory and some optional. Some of those types of insurance are title insurance, homeowners insurance, mortgage life insurance, mortgage insurance and home warranty plans.
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 Title insurance insures a buyer that he or she is getting clear title to the property without any liens or encumbrances. A title insurance company researches the county records to see what has been recorded on the property. The title commitment will show what loans need to be paid off and what restrictions, if any, are on the property.
The cost is determined by the sale price and varies with insurers. Typically, the seller pays for the policy, and any endorsements required by the buyer's lender are usually a buyer's responsibility.
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- Homeowners insurance covers losses caused by fire, hailstorms or other casualty on the property. Lenders usually require the buyer to have insurance in an amount equal to or greater than the loan amount. Flood insurance is required by the lender if the property is in a flood hazard area. Condominiums and townhomes are somewhat different, as certain items may be covered by the homeowners association fees.
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- Mortgage life insurance is optional and is usually term life insurance that is obtained in the amount of the loan on the home. Thus, if the buyer dies, the loan on the house is paid off.
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- Mortgage insurance (also known as a private mortgage insurance - PMI) is insurance to cover the lender on the mortgage. This coverage is typically required on loans where the buyer is borrowing more than 80% of the value of the property.
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- Home warranty plans can be purchased at the time a home is bought. They usually cover major items in the home such as the furnace and appliances. It is not a replacement for homeowners insurance, but can provide additional coverage for some items.
As with any type of insurance, be sure to read the policy carefully and take a good look at the deductible. Talk to your Realtor or your insurance agent to make sure you understand the policies and who will be paying for them.
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The Clarke Agency, Inc.