Buy Your Own Homeowners Insurance

Posted September 9th, 2010
by HomeownersInsurance.org Staff (no comments)

Some home owners, after falling behind in their payments, have allowed their mortgage companies to purchase homeowners insurance on their behalf and apply the extra charges to the mortgage payment. Frankly, that’s a very bad idea. Here’s why:

  1. When your mortgage company buys the insurance, even if you are paying for it, they will generally only buy enough insurance to recompense themselves in the event that tragedy strikes and you lose your home to fire, tornado, or other disaster. While this does relieve you of having to pay off the mortgage, it doesn’t do squat for giving you any money to live on, or for replacing anything that was damaged in your home. You’re on your own for all of that.
  1. When your mortgage company buys the insurance for you, they have no real vested interest in keeping the prices down or shopping around. Therefore, they will simply run you through the homeowners insurance company which they always use. The bottom line here is that you will almost always end up paying more for your insurance than if you had bought it yourself.
  1. Often, the reason why mortgage companies buy the insurance for you is because your home has problems which would stop other insurance companies from accepting the risk. If this is the case, why are you living in the house? It’s dangerous. Chances are, if you live in this kind of house, you are fixing it up while you live in it. The problem with having your homeowners insurance through your mortgage lender is that you have no one to go to as you make improvements to make your case for a better rate.

If you’re in the situation of living in a fix ‘er up home while you’re trying to remodel it, the last thing you need is an extra expense. In many cases, you would be better off to rent an apartment while you are fixing the house up. In our own personal experience, a small apartment would have cost us less money than the extra insurance premiums we had to pay because standard companies would not insure the home. Trust us on this one: if you can’t afford to live elsewhere while you fix the home up, and it’s in bad enough shape that insurance companies won’t touch it, you need to get out of the home remodeling gambit.

Image by Kyle Kruchok

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