I read an interesting article this week from USA Today about how many homeowners don’t have enough home insurance in the event of a disaster like a flood or fire.
By now, you may have seen the stories about the heavy floods in Texas (here’s a photo gallery). Many people lost their homes, and I hope they have adequate insurance so they can rebuild. Much of the devastation took place in San Marcos, which is the home of Texas State University (my alma mater). My thoughts and prayers go out to all impacted by the flooding.
What does the flooding mean for you and your clients? Home insurance is essential.
As your clients shop for the best plan, keep a few things in mind:
The borrower has the right to choose his/her own insurance carrier as long as the coverage meets lender requirements. According to Fannie Mae, there’s one main rule:
- Insurance must protect against loss and damage from fire, wind, civil commotion, smoke, a windstorm, a hurricane and hail. The coverage must also protect from damage caused by an aircraft, a vehicle and an explosion.
Further, I often see homebuyers wait until the last minute to choose a homeowner’s insurance plan, which can hold up the loan process. Lenders need to make sure there’s enough coverage and that it meets the guidelines.
The takeaway: encourage your buyers to do their research early on and select a homeowner’s insurance policy well before the closing date.