Chicago, IL (PressExposure) September 30, 2009 -- /1888PressRelease/ With external factors affecting homeownersâ insurance policies everyday, homeowners are in dire need of sufficient hazard insurance now more than ever. Unfortunately, too many homeowners fail to obtain the right amount of hazard coverage, making them risky clients to lenders. A recently published article on InsuranceAgents.com describes the relationship between risk and insurance.
âInsurance of all types is based on one important factor: risk,â the article, Mortgage Hazard Insurance And You, describes. âWhen you apply for a loan to afford your mortgage, your lender will deem their investment to be risky if you spend 20 percent or less on your down payment. In order to hedge their bets they may require a mortgage hazard insurance policy in the event you are underinsured and sustain significant damage. Mortgage hazard insurance is protection for your lender that their loan will be covered regardless of the extent of your coverage.â
Mortgage hazard insurance is a guarantee to the lender that their loan will be covered regardless of the extent of homeowners hazard insurance coverage the homeowner has.
âUnfortunately, not all homeowners take out the necessary amount of coverage for their homeâs hazard protection,â the article states. âFor example, there are some Florida homeowners who skimp on hurricane coverage in their policies and there are some California homeowners who skimp on earthquake coverage in their hazard policies. It is unreasonable to think that your mortgage lender can double check all their borrowersâ policies to ensure they are adequately insured so instead your lender most likely has mortgage hazard insurance.â
Not thrilled by the thought of having to be punished for being too ârisky?â Homeowners will be glad to hear that there are things they can do to rid themselves of the financial obligations that coincide with mortgage hazard insurance. â[K]eep in mind that once you pay off enough of the down payment or your loan matures beyond a certain point, you should be able to drop the financial obligations that come with mortgage hazard insurance between you and your lender,â the article emphasizes.
Homeowners concerned about their âriskâ level should contact their home insurance agent to discuss whether or not they will need to obtain mortgage hazard insurance in the near future.
Staff contribution: Rafael Onak