Insurance    

When you insure your home, it should be insured for the total amount it would cost to rebuild your home if it were destroyed. If you don't have sufficient insurance, your insurance company may only pay a portion of the cost of replacing or repairing the damaged .

 

Private mortgage insurance is a type of insurance that helps protect the financial institution against losses due to foreclosure. This protection is provided by private mortgage insurance companies and allows financial institutions to accept lower down payments than would normally be allowed.

Private mortgage insurance also enables financial institutions to grant loans that would otherwise be considered too risky to be purchased by third party investors like the Federal National Mortgage Association (FNMA) and the Federal Home Loan Mortgage Corporation (FHLMC). The ability to sell loans to these investors is critical to maintaining mortgage market liquidity, which in turn, allows financial institutions to continue originating new loans.

 

Mortgage insurance can usually be canceled by the home buyer after he or she has at least 20 percent equity in the home. Borrowers should contact their servicer to find out the procedure for canceling mortgage insurance when they think they have achieved 20 percent equity. Guidelines for canceling private mortgage insurance are set by investors. Typically, investors will require an appraisal on the property. The servicer can recommend qualified local appraisers.

 

Flooding is not covered by a standard homeowners insurance policy.

To determine if you need flood insurance, ask your insurance professional or financial institution  about the flood history in your area. If there is a potential for flooding, you should consider purchasing a policy that covers the structure and your personal belongings.

If your lender determines that the property you are purchasing is in a flood hazard area, they will inform you and require flood insurance be purchased prior to loan closing.  Flood insurance must remain in force with adequate coverage as long as the property is mortgaged.

Flood insurance can be purchased from an insurance agent or company under contract with the Federal Insurance Administration (FIA), part of the Federal Emergency Management Agency (FEMA). Flood insurance is only available where the local government has adopted adequate flood plain management regulations under the National Flood Insurance Program (NFIP).

A policy of title insurance is a contract of indemnity between the insured and the insuring company relating to the title to the land described in the policy, protecting the insured against loss of damage by reason of defects, liens or encumbrances of the insured title existing at the date of the policy and not expressly excepted from its coverage.

The policy is issued after a complete search and examination of the public records and shows the condition of the record title, including any money obligations outstanding against the property, easements and other matters which may affect the rights of ownership, possession and use of the property.

There are different types of policies. Owners’ policies are issued to real estate owners. Purchasers’ policies are issued to purchasers of real estate under contract. Mortgage policies are issued to financial institutions. In addition there are several other special forms of policies. There is a type of policy to meet the requirements of almost any form of real estate transaction.

 

What Protection Does Title Insurance Give?
It insures that the "record" title, is good subject only to the exceptions expressly set out in the Policy. It also insures against certain matters which do not appear of record, such as forgery, identity of parties, incompetence of former owners, interest of missing heirs, and status of individuals not having the "right" to sell property.

What Risks Are Not Covered?
The standard owners policy and standard mortgage policy are based on public records of the recording district in which the land is located. It does not insure against matters which would only be disclosed by actual inspection or survey of the property. It does not insure against certain matters not shown by the public records such as unrecorded easements, liens or money obligations; unrecorded utility rights of way, public or private roads, community driveways and other types of encumbrances, or against the rights or claims of persons in possession of the property which are not shown by the public records.

Can Protection Be Obtained Against Matters Not of Record?
Upon application, the issuing company may specially cover matters which are disclosed by a physical inspection and/or a survey of the property, subject to any exceptions which the inspection will determine to be proper. An additional risk premium is charged for this type of coverage. Insurance of this kind is called “extended coverage.”

Are There Different Kinds of Policies?
Yes. Owners’ Policies are issued to real estate owners. Purchasers’ Policies are issued to purchasers of real estate under contract. Mortgage Policies are issued to lenders. In addition there are several other special forms of policies. There is a type of policy to meet the requirements of almost any form of real estate transaction.

When Is the Policy Issued?
An owner's policy protects only the owner while a Mortgage policy protects only the holder of the mortgage on the property. Separate policies are required to protect both interests. Special rates are available when both Owner's and Mortgage policies are applied at the same time.

The Owners Policy of title insurance usually is issued after the deed to the buyer is 'delivered' and recorded. A Purchasers Policy is usually issued after the contract has been executed by both parties or after the signed contract has been recorded. The mortgage policy of title insurance is usually issued after the mortgage or deed of trust has been properly executed and recorded.

If I Was Insured When I Bought the Land, Why Should I Have It Re-Issued to My Purchaser When I Sell?
The coverage of your policy is against all matters that appeared of record up to the date of issuance of your policy. Since that time many documents may have been recorded, some of which may affect the title to your land. Taxes and assessments may have accrued and be unpaid. There may have been actions in court affecting your title. The purchaser is entitled to have full information and protection as to the condition of the title right up to the date of his purchase. In addition, there may be matters of record which would prevent either the seller or buyer from selling, buying, or mortgaging land until such matters have been cleared. These items include such things as federal tax liens, judgments, incompetence, divorce actions and other conditions which the title search may disclose.

How Are Premiums for Title Insurance Determined?
Title Insurance Premiums are determined by the amount and type of coverage provided. Unlike other insurance premiums, however, the title insurance premium is paid only once as the policy is effective for so long as title or "ownership" remains in the name of the insured, or his heirs or devises. Rates are filed with the insurance commissioner who regulates the activities of title insurers.