Foreclosure’s Effect on Coverage

Charles Goodman Group: Trusted Bedford Insurance Agents

When a person is facing foreclosure, they are confronted with worrisome situations and trying decisions. The residence that they have worked tirelessly to purchase and maintain will soon become bank property.

Foreclosure creates emotional, psychological and financial difficulties for homeowners. For example, foreclosure will have a negative effect on a homeowner’s credit score, making it difficult for them to purchase a new home in the future. Personal savings may also be drained in an attempt to fight a mortgage lender.

During foreclosure, a homeowner risks having their insurance policy canceled. It is a good idea for an individual facing foreclosure to speak to a Bedford insurance agent in order to learn how the foreclosure process will impact their policy.

In many circumstances, homeowner’s insurance is bundled with mortgage payments. Once a homeowner stops making mortgage payments, the insurance company will void the policy and the home will be left without protection.

Homeowners who have decided that they are not going to fight for their home may have less of a problem with their home insurance policy being canceled. They will be relieved of any financial burden, and the mortgage company will be financially responsible for the home.

A trusted Bedford insurance agent from the Charles Goodman Group can assist you with any questions regarding health insurance or life insurance.

Homeowners who are looking to fight to keep their home will need to reaffirm their mortgage. To do this, they must pay any outstanding balance on their mortgage and stay up to date on their mortgage payments. Of course, this also means that the homeowner must also pay their homeowner’s insurance premiums. Homeowners in this circumstance should expect a moderate increase in their monthly premium. This is due to the fact that being on the verge of foreclosure can be seen as a major risk factor by an insurance company. As a result, the insurance company will adjust premiums accordingly.

A homeowner who decides that they will allow their home to go into foreclosure will still need to purchase provisional insurance. This insurance will protect the contents of their home. Technically, it is not renter’s insurance, but the function of possession protection insurance is similar to that of renter’s insurance. If any of the possessions inside the home are damaged, the homeowner will be entitled to receive reimbursement. Once the home goes into foreclosure, the mortgage lender will purchase structural protection for the home.

When a homeowner is dealing with foreclosure, there are many factors of which they need to be cognizant. Having proper insurance on the home and possessions inside the home can prevent an already difficult situation from becoming even more challenging.