For many people their home is the largest investment they will make in their lifetime. For this reason, homeowners should be careful to purchase adequate property insurance. Mortgage lenders require borrowers to have homeowners insurance in order to protect their investment to finance the home. Unfortunately homebuyers often assume the basic policy required by lenders will be sufficient, but the policy limits and coverages may be inadequate.
Flood insurance is sold as a separate policy.
Generally, there is no requirement to purchase this earthquake insurance and the majority of U.S. homeowners have chosen not to obtain this additional coverage. However, most people are not aware of the extent of earthquake activity. An extensive and costly amount of damage can be done to a home in the event of an earthquake. A common cause of damage occurs when homes slide off their foundations. Prior to 1940, newly constructed homes were placed on the foundations with no permanent attachments, versus homes built since the 1940's have been required to be bolted to the foundations.