What is Real Estate Insurance?
What is Real Estate Insurance? It is a broad term that covers several different forms of insurance programs designed to meet the needs of the Real Estate market.
What is Real Estate Insurance? It is the name given to a branch of the insurance industry that offers insurance and risk protection that is specifically designed for the real estate industry. Some of the other divisions of Insurance include Life Insurance and Property Insurance such as Automobile Insurance. Real Estate Insurance comes in several different forms and serves the purposes of all of the parties to the real estate transaction including the builder, the seller, the lender, and the buyer.
The builders are covered with a particular type of Real Estate Insurance that offers protection against liability and loss. This type of insurance is very controversial at this time. The changing nature of the market and the tendency to file suits for liability issues has created many exclusions and higher premiums.
Sellers and lenders often insist upon another type of Real Estate Insurance that is usually called Mortgage Insurance. This insurance pays for the remaining amount of a mortgage should the buyer become disabled or dies before the mortgage is repaid. It also remains in force as long as the equity value of the home is less than the remaining loan value. This type of insurance protects the sellers and lenders from the problems and potential loss of foreclosure.
Home buyers have another type of Real Estate insurance that is called property insurance and provides protection for the physical property associated with real estate. This would include the structure itself and all of the furniture and possessions inside the home. This type of insurance also has exclusions and the buyer must be careful to make sure he understands them. Although this type of insurance is also called fire insurance by some and does cover fire loss, it does not cover earthquakes, floods, or acts of war unless specified within the policy.
Another type of real estate insurance is Title insurance. This type is made necessary by the rather careless and inexact method used in the United States to record deed transfers. The Insurance covers the insured parties from loss based on a contested title or other contested rights based on actual ownership. All of these various types of insurance are generally considered Real Estate insurance because they all protect aspects of the basic real estate transaction or the actual real estate itself.