price of the home in cash, which is unlikely, your lender will require the purchase of homeowner’s insurance ahead of time. After the agreement to purchase, but before closing and title transfer, it’s the seller’s duty to ensure appropriate insurance coverage on the house and property. Immediately on closing the sale and when title transfers, the seller no longer has an insurable interest in the property, therefore the seller’s coverage ceases. The new owner must have homeowner’s insurance coverage in place. In most cases, you’ll be asked to provide proof that you’ve prepaid one year’s worth of coverage before the lender will set closing. The lender holds a lien on the property until the mortgage has been paid off. To safeguard their interest, lenders want financial protection in the form of a home insurance policy to pay for the cost of rebuilding your home, should disaster occur. A standard homeowner’s insurance policy generally protects against (among other items): • Fire and lightning • Damage from hail and windstorms • Theft and vandalism • Smoke damage • Falling objects, like tree branches • Damage from the weight of ice, snow, or sleet • Frozen plumbing, heating, AC, or other household systems
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