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Shopping for Insurance

Like mortgages, there are many providers of homeowners insurance. However, unlike choices a buyer has with regards to loan products, the choices of homeowner's coverage is somewhat dictated by the lender and loan program that the buyer is utilizing.

• Homeowner's insurance policies typically cover damage to the home, losses by theft or vandalism, and liability if people are injured on the property. Policies do not cover flood damage. Buyers in flood zones should check with their insurance agent to determine how to obtain coverage.

• In addition to damages and theft at the buyer's home, many homeowner insurance policies will also cover damage and theft at rental units associated with the buyer (most commonly a child's apartment).

• While a homeowner's insurance policy covers liability for people injured at the home, a buyer can also obtain a personal "umbrella" policy for additional liability. This can be helpful, particularly if you have assets other than your home.

• Even if the insurance company allows quarterly or monthly premium payments most lenders will require a buyer to pay 1 year of insurance premiums prior to the closing. Most lenders will also require the buyer to pay a monthly payment to the lender towards the following year's insurance.

• If you are considering purchasing a condominium rather than a stand-alone home (not part of an association) then the condominium and/or association is likely covered by a "Master Insurance" policy. Most Master policies cover damage to everything except for the contents (bed, couch, etc...) of the buyer. The buyer should consider obtaining a separate policy for their contents.

• A buyer of a condominium also may want to ask their insurance agent about a "betterments endorsement." These endorsements provide coverage for damage to improved fixtures. For instance if the standard kitchen countertops in the association are formica and you install granite, the betterment endorsement would cover you for the difference in value between the two materials.