When you are preparing to buy a home, part of the transaction will involve the purchase of multiple types of insurance. These insurance policies include home owner’s insurance and title insurance. The title insurance is actually two policies if you are taking out a loan. Understanding the similarities and differences between home and title insurance will help your transaction to go as smoothly as possible.
What Home Insurance Covers
Home owner’s insurance policies cover basic perils that might happen to a property. These listed perils include: volcanic activity, sinkholes, fire, smoke damage, vandalism, explosions, riots, and aircraft or rail collisions. Other covered perils include wind and hail damage, burglary, accidental water damage, falling objects and burglary. You can purchase riders for earthquake and flood insurance. Your policy may provide replacement or full-value coverage for these perils.
What Title Insurance Covers
Title insurance covers a wide variety of problems or defects associated with the deed of a property. These defects include errors and omissions in the deed itself, forgery, undisclosed or missing heirs and liens by public utilities, contractors and taxing entities. According to the California Department of Insurance, the lender’s policy does not protect your financial interests. It only covers the lender’s monetary loan to you.
Working With a Realty Agency
Working with a realty agency is important for every real estate transaction. Some companies, like Century 21 Town & Country, know that realty agencies can provide you with key information about typical rates for home and title insurance. Realty agencies can also explain how the process works in order to facilitate your real estate transaction.
Who Pays for Home Insurance and Title Insurance
When you purchase a home, you are responsible for buying the home owner’s insurance and the title insurance. In some instances, you may be able to negotiate with the seller for the owner’s title insurance fees, but you must pay for the lender’s title insurance policy. Lenders will not allow the transaction to proceed unless you show proof of payment for these policies. Since you are the person purchasing these insurance policies, you get to choose the company that you want to use.
Home and title insurance provide you with different types of protection against financial loss. Because the purchase of a home is likely to be one of the biggest transactions you will ever make, it is important to protect yourself. Having both of these policies can give you the peace of mind that comes from knowing your financial future is on solid ground.