Once you have bought a property and are already at the closing stage, your mortgage lender will provide you with a list of requirements you should complete. Those include obtaining title insurance and getting a homeowners insurance policy for your soon-to-be home.
You might be surprised to know that you are required to get a home insurance policy even before you move into your next property. In this guide, we will share with you the basics of acquiring a home insurance prior to moving day.
It Is Not Required By Law
Unlike auto insurance, homeowners insurance is not legally mandatory, but lenders will require you to get one before they grant you a loan. Additionally, it is unnecessary if you buy the home outright, but you should still get one to protect your property against costly perils such as weather and fire damage.
It Has To Meet Certain Requirements
Weeks out from closing, your insurance provider will likely send you a notice asking you to get hazard insurance. This involves minimum requirements. For example, the policy must cover the minimum amount for windstorms, hurricanes, fire, and hail. Moreover, you will be required to get enough coverage to cover 100% of the house’s replacement or rebuild cost.
Your mortgage lender will require the policy to have a mortgagee clause with a stipulation that the coverage can’t be canceled within a minimum of 30 days prior to the written notice to the lender. It is also normal for lenders to have deductible requirements if the policy comes with special percentage deductibles.
You Need To Get Homeowners Insurance At Least Three Weeks Before Closing
It is important for you to start shopping for homeowners insurance policies three weeks before the closing date. This is because a lot of mortgage lenders will ask for proof of it weeks ahead of the closing. Also, by getting homeowners insurance policy in advance, you can save money on premiums. This is because insurance companies usually reward forward-thinking applicants through an early bird discount.
You Need To Pay The First Year’s Premium Before Closing
It is common for lenders to ask you to pay for the first year of the homeowners insurance upfront, either before you close or as part of the closing costs. Don’t worry because you will actually save more money when you do that instead of dealing with monthly payments.
Those are the things you need to know about getting a homeowners insurance policy before closing. As you can see, it is essential to have coverage even before you move into your new property. Despite it not being required by law, it is required by most mortgage lenders.
A homeowners insurance policy will give you the peace of mind you deserve, especially if your home is located in an area that often experiences adverse weather effects. With it, your property will stay protected no matter what.
Let’s talk about acquiring a competitive homeowners insurance policy for your new home. Contact Panorama Insurance Agency today for more information.