How does homeowners insurance work with a mortgage?
When a homeowner has a mortgage on their home, the lender typically requires the homeowner to have homeowners insurance as a condition of the loan. This is because the lender has a financial interest in the home and wants to protect their investment in the event of damage or other hazards.
When a homeowner has a mortgage and also has homeowners insurance, the insurance policy typically covers the structure of the home and the belongings inside. If the home or belongings are damaged or destroyed, the insurance company will compensate the homeowner for the loss, up to the limits of the policy. The homeowner is typically required to pay a deductible before the insurance company will pay out a claim.
It is important for homeowners to carefully review their insurance policy and understand what is and is not covered. It is also a good idea to regularly review and update the policy to ensure that it continues to meet the needs of the homeowner and their home.