Once your offer on a new home in Hampton Roads is accepted, you’ll need to purchase homeowner’s insurance before your closing date. Other types may be appropriate, as well. The essential idea behind various forms of real estate insurance is to protect owners in the event of a catastrophe.
What Kind and How Much?
Insurance policies and warranties have limitations, and individual programs have different levels of coverage, deductibles and costs. A good real estate agent can connect you with a trustworthy insurance company. There are various forms of insurance associated with home ownership, including these major types:
Homeowners’ insurance. Homeowners’ insurance provides fire, theft and liability coverage. Homeowners’ policies are required by lenders and often cover a surprising number of items. In some cases, they may even including such property as wedding rings, furniture and home office equipment.
Title insurance. Purchased with a one-time fee at closing, title insurance protects owners in the event that title to the property is found to be invalid. Coverage includes “lenders” policies, which protect buyers up to the mortgage value of the property, and “owners” coverage, which protects owners up to the purchase price. In other words, “owners” coverage protects both the mortgage amount and the value of the down payment.
Flood insurance. Generally required in high-risk flood-prone areas, this insurance is issued by the federal government and provides as much as $250,000 in coverage for a single-family home plus $100,000 for contents. Your real estate agent can explain which locations require such coverage.
Home warranties. With new homes, buyers want assurance that if something goes wrong after completion, the builder will be there to make repairs. But what if the builder refuses to do the work or goes out of business? A home warranty can help. They are generally designed to provide several forms of protection: workmanship for the first year, mechanical problems such as plumbing and wiring for the first two years, and structural defects for up to 10 years. Home warranties for existing homes are one-year service agreements that can be renewed annually. In the event of a covered defect or breakdown, the warranty firm will step in and make the repair or cover its cost. You pay only a small deductible.
