- Category: Answers to Your Questions
- Published: Friday, 28 February 2014 09:20
- Written by Doug Hartley
- Hits: 1090
When you are buying a home and are borrowing money to purchase it, the bank or mortgage company lending you the money wants to be sure the home has coverage. The home is used as collateral to secure the loan. If you can't pay the mortgage payment they will kick you out and take the home back. The bank wants to be sure the home is still worth something when they go to resell it to someone else. That's why they want it insured. If the home burns down or is severely damaged in a storm and you have to move out they want to know that the value of the home is preserved. They want proof there is insurance in place before you even move in. The temporary proof of home owner insurance before the insurance company actually issues a policy is called a binder. It lists all the important information to identify you, your home, coverage and the lender. That binder gets sent to the officer responsible for closing your loan before the date it closes. Its a guarantee that your home will be covered for at least 30 days giving the insurance company time to decide whether they want to really insure you or not.