What Is The Difference Between Home Owners And Mortgage Insurance?

What Is The Difference Between Home Owners And Mortgage Insurance?

Sometimes it is confusing for some home buyers to differentiate between home owners insurance and mortgage insurance, I have been asked more than once to explain the difference between the two of them. My answer is short and simple, both premiums are paid by the home owner but only the home owners insurance protects the home owner, the other one, mortgage insurance protects the lender.

Home owners insurance is paid by the home owner to protect his investment. Most standard home owners insurance policies include four different type of coverage, coverage for the structural of the home, coverage for personal property, coverage for liability and coverage for temporary expenses.

Mortgage insurance is paid by the home owner but protects the lender. This is a policy paid by the home owner to protect the lender in case he in unable to make the payments anymore, the insurance company will pay lender in full if borrower defaults on the loan.