Home Owners Insurance
Homeowners Insurance is also known as Hazard Insurance. This type of policy protects the home owner and the property associated with the home loan from any catastrophic event, with the exception of flood. Flood insurance is a completely different type of insurance that is required for specific properties.
The lender wants to make sure their financial investment in your home is protected in the event of a fire or other risk.
Home Versus Condo
The type of policy you get to insure your home will vary depending on if you own a condo or a single family home.
If you own a condo, your policy would only need to protect from the walls inward. A management company is going to have a policy that protects the building itself. You only need to insure the portion of the home that you own.
If you own a single family home, or town home, that is fee simple, that means that you own the structure as well as the land the property sits on. In this case you will get a homeowners insurance policy that protects the structure of the home as well as the land it sits on.
Is Homeowners Insurance The Same As Mortgage Insurance?
Homeowners Insurance and Mortgage Insurance are two different insurance policies. They protect different things and are two different payments.
Homeowners Insurance protects the home and land it sits on. Mortgage Insurance protects the lender in the event the homeowner defaults on their loan.
Read more about Mortgage Insurance.