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What is Liability/ Fidelity Insurance for the Homeowner's Master Policy and all common areas? |
Buying my first home in a master-planned community. The commitment letter from the loan processor has listed a condition that I provide "evidence of Liability/Fidelity Insurance for the Homeoener's Master Policy and all common areas." When I searched the internet, this insurance looked like something condo associations have to purchase? Is this something additional I have to purchase above Homeowner's insurance? How much will it cost? Some "master planned" properties are part of an association that charges a monthly assocation fee. Sometimes, this fee will include your portion of the master insurance policy for the association. If you share a wall or a roof, it's almost guaranteed that you have a master policy. If you have a single family home that is not attached to any other home, your association dues might only cover lawn care/snow removal/common area maintenance. The liability clause protects the assocation from lawsuits if someone slips on their sidewalks, etc... Fidelity protects you in case of fraud or embezzlement by your association managers. Every association would have this by default, as no one would lend on their properties without it, so don't worry, it's not something you have to worry about. You should be receiving a copy of the assocation documents, so you can review them. You should certainly ask your agent for help. But really, I've almost never made my client go get their insurance binder themselves. I ask you to get me the contact info, and I go do it myself. So that's a little weird. I'd get the HOA number, and make them get it. They need to provide the insurer with their own mortgage loss payee clause and loan number anyway, stuff you shouldn't have to do. One final, very important note: If you are covered under a master policy, your personal property is NOT covered. Not even your kitchen cupboards and appliances. Only the structure. You need to get yourself an HO-6 policy. It's similar to a renter's policy, in that it insures your personal property in a home where they aren't covering the structure. Getting this from the agent you have your car insurance with is a good idea, as you'll often save money on the car insurance to offset 50% or more of the cost of the HO-6. For my HO-6, it was only about $250 for the whole year. And I saved about $150 annually off my car insurance, so it really was less than $10 per month. Don't forget to get it!!!!!! PS the bank won't require the HO-6. They don't sound like they'd even have mentioned it to you. But for your own sake, don't skip it. You can't control it if your neighbors burn your place down. Source(s): 10 years in mortgage banking |
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