As part of the home buying process, it is important to consider that Hazard Insurance will be required for your mortgage, and is a determining factor for approval. Hazard Insurance, otherwise known as Homeowners Insurance, is required on every mortgage especially here in Sarasota and Charlotte county. However, there are many options that have to be considered to ensure that you receive the policy that best fits your needs and wants
What is Hazard Insurance?
Hazard Insurance is defined as a policy that covers private residences, and can cover many different aspects of the home including property, the home itself, the home's contents, and potentially the liability on the property through an assortment of endorsements attached to the policy. In Florida, Hazard Insurance the most common endorsements can often include Flood Insurance and coverage during catastrophic events and natural disasters such as hurricanes.
Hazard Insurance Requirements for Mortgages
In the pre-approval stages of your mortgage, your lender will use averages for your area and home requirements, such as if you are searching for a home that will be on or near a lake, canal, or large body of water, to determine a rough estimate for monthly insurance costs.
Once you have found your dream home, your lender will ask you a series of questions to create a slightly less rough estimate of what the Hazard Insurance premiums will look like. This will assist the lender, and the purchaser, in understanding the total monthly cost of the home. As well, this information will be used to assess the affordability of the home, a strong determining factor of the mortgage process.
Questions at this stage will include:
In Florida every home is inside a flood zone, however, there are some zones that are not required to obtain Flood Insurance, while there are others that will require you to obtain Flood Insurance to ensure the closing of your mortgage.
These early stages will determine the amount of insurance that will be required, if Flood Insurance or other endorsements will be required for closing, and give you an idea of how much your monthly premium should be to ensure that you can close on your mortgage.
To ensure the most efficient process, it is beneficial to look for an insurance agent or agency that you trust during your buying process, prior to the closing of the property.
Finding and Agency/Agent to Work With
In buying a home there are many layers and individuals that will assist you along the way; a trustworthy insurance agent will be a key asset to the team of professionals that will make the process progress smoothly.
When looking for an insurance agent and/or agency, there are numerous considerations that need to be made. Some of these considerations may include:
It is recommended that you connect with several different agencies and agents to see what they can offer you. Note that although insurance carriers work with numerous agencies and agents, the costs are going to be the same throughout the state, as they are regulated by the state of Florida. Cost variances are determined through different carriers and the endorsements that are included with your policy. It is important that you work with an agent you trust, so that the policies and the endorsements included are understood by all parties.
Finalizing Your Hazard Insurance
Once you have found the home of your dreams, it’s time for all of the pieces to come together. At this point, you will have to give further information about your potential new home to your insurance agent so that they can create the finalized policy for you with all of the endorsements that you have requested. They will then share the Package Endorsement with your mortgage lender to finalize this part of the mortgage closing process.
A huge thank you to one of my insurance partners, Ashley Guzman of We Insure, for her assistance and expertise in the home insurance industry.
If you should need any assistance or have questions about the Hazard Insurance process, email me at angie@gulfsidemtg.com.
