No Company Will Insure My Home And My Lender Requires It. Will The Bank Purchase Coverage? Will It Cost Me More?

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Jul 16, 2021

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When insurance is not available on the open market, there is typically a state-operated or-mandated “pool” of coverage so that no one will be forced to go without insurance. The cost of such insurance is typically higher than would be available in the open market. This is because the risk for property in the particular area is greater than in other areas.

If you are purchasing property in an area where insurance is not available on the open market, your lender will still require you to have insurance on the property up to at least the full value of the mortgage (or 80% of the actual value of the home). You may have to purchase “pool” coverage to meet the lender’s requirements. If you fail to keep your coverage in force, the lender will purchase coverage that protects its interest. In any event, read what the coverage is. You may discover that it covers only the structure, not your personal property.

If the lender requires coverage, you may choose your own insurer. You don’t need to purchase coverage from the insurer your lender recommends.

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