Whether you’re buying a house, condo, or multiple units you will be required to carry insurance. But you may wonder, “what is hazard insurance and how much do I need?
What is it? – Hazard Insurance is an insurance policy that typically protects you against fire and other disasters. Policies range from covering nearly everything to just the bare bones. Most commonly it protects against fire. But there are add-on like Earthquake, Personal Property, Liability, etc. You will typically shop a number of different providers to find the best terms and service for you.
How much insurance you get is up to you… to a point. The lender will require a minimum level of insurance. That is, they want to make sure that you have a policy sufficient to either rebuild the structure in case of disaster, or at least pay them what you owe them. So, in the case of a House, you’ll need to have coverage that at least equals the amount you are borrowing from the lender. For example, if you bought a 500k home and took a 400k loan, they’ll want you to have a policy that pays out at least 400k.
For a condo it’s a little different. Your HOA typically covers the exterior of the building. So you only need to cover your interior space. They call this a Walls-In policy, or often an HO-6 Policy.
There are a couple other tips about Hazard Insurance that can save you hundreds of dollars. If you’re interested in learning more about these you email me by clicking here, or call me directly at the number below.