Why Mortgage Lenders Require Home Insurance

Buying a home in Oklahoma comes with a checklist, and if you have a mortgage, homeowners insurance is usually on it. Before you get the keys, your lender will likely require a policy, since it may help address risks to your home and their financial interests.

Why Do Lenders Mandate Home Insurance?

Mortgage lenders provide financial assistance toward your home purchase, so they remain closely involved until the loan is paid off. Home insurance can help make funds available to repair or rebuild your home if it is damaged by events such as fire, storms or theft. Without insurance, a major loss may leave both you and your lender facing high costs.

How Does Home Insurance Support Both Parties?

Here’s how a policy can work for you and your lender:

Lender focus: The lender’s main concern is the value of the property backing the loan. Home insurance can help make funds available after a covered loss so that the property may be repaired or rebuilt and continue to serve as collateral.

Homeowner focus: For you, home insurance can offer practical support. It may cover various losses and expenses resulting from incidents involving you, your family and your home, while also fulfilling obligations to your lender.

What Is Typically Included in This Policy?

A standard home insurance policy may offer:

• Dwelling coverage for the structure of your home
• Other structures coverage for detached buildings on your property
• Personal property coverage for your belongings
• Liability coverage for accidents affecting third parties
• Additional living expenses coverage for costs related to your home becoming uninhabitable due to a covered event

How We Help Oklahoma Homeowners

At Bayouth Agency, we help clients obtain home insurance that meets lenders’ requirements and provides sufficient coverage. Contact us today to get started.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.