What Types of Insurance Do You Need as a Homeowner?

What are the types of insurance that homebuyers need to know about?

Several different types of insurance policies are available to homeowners, although not all are necessary. The two main ones you need are title and homeowners insurance, but there are others to consider.

First, title insurance usually isn’t even optional since it’s typically mandatory when you obtain a mortgage. However, if you’re paying all cash, you can skip this insurance, but you shouldn’t. This insurance makes sure the lender and owner’s financial interests are protected in case there are issues with the title.

Homeowners insurance is another necessity since it protects you from damage caused by fires, storms, vandalism, and other types of disasters. You’re not legally required to have it, but it’s beneficial even if you own the home outright.

You might also want to consider adding flood insurance if you live in an area that experiences excessive flooding. Also, if your down payment is less than 20%, your lender might require you to obtain private mortgage insurance, which gives the lender confidence that you can afford the mortgage payment.

Sources: Araglegal.com, Investopedia.com, Realtor.com