Want to make sure you are fully covered in your next real estate transaction? These six types of real estate insurance are sometimes overlooked but make all the difference when the unexpected happens.
1. Title Insurance – Buyer’s Policy
Title insurance is a must if you want to be sure you truly own the property, have specific ownership and access rights, and desire protection to defend that ownership from fraudulent claims. Those who finance their property purchase will typically be required to obtain a Lender’s Policy to cover the lender. This provides no coverage to you as the owner. Make sure you also request a Buyer’s Policy to cover you whether you finance or pay cash. This is very inexpensive as policies are written at the same time.
One blind spot which causes home buyers and sellers to overlook the value of using licensed real estate agents is Error and Omissions (E&O) Insurance. You can, in fact, be sued for large sums because of simple mistakes or omitted information on the paperwork or verbally. This can easily run into tens of thousands of dollars, if not more. That’s not including your attorney and legal fees. For the uninsured, these cases can take years to work out, while the property and finances are held hostage in the meantime. Realtors typically carry E&O insurance to cover them and protect the transaction. This alone is worth getting an agent for, but you should still ask them if they have coverage themselves.
3. Wind-Storm Insurance
Those in wind and storm prone areas may need a specific policy on top of their basic fire and homeowners’ insurance. This protects you from natural disasters like tornadoes, hurricanes, and tsunamis.
Flood insurance is needed by far more buyers and owners than they realize. It is typically mandatory for those who use financing, but still a smart idea for everyone else. You never know when the storm of the decade will come through, rip a hole in your roof, and dump gallons of water in your home. This type of insurance is very inexpensive and needed because water damage typically isn’t covered under other policies and riders.
5. Sinkhole Coverage
As we saw in Fraser on Christmas Eve last year, sinkholes can happen in Michigan. Living on top of clay does not make you immune from sinkholes caused by gas fields, utility leaks, and water level changes. Homeowners’ insurance policies in Michigan mostly exclude this, leaving you high and dry when the ground opens up. Those living near underground utility easements should speak with their insurance company about this type of coverage.
6. Renters Insurance
If you have renters on your property, you should have renters’ insurance. Traditionally, the renters should obtain this insurance, pay for it, and provide the owner proof of coverage. This covers the tenant’s belongings. Without it, if anything happens including storms, theft, or lawsuits; you can bet many renters will look to sue the landlord or make a claim against their insurance policy.
With so much on the line, it pays to make sure you are covered during the real estate transaction and duration of ownership. Get covered.
For any title insurance questions, make sure to reach out to us at Michigan Investment Title: your friendly, local title insurance company.