They have access to databases that store credit information on most consumers in the country. Additionally, they search the public records for derogatory items that may have been filed against a consumer such as judgments, bankruptcies, and liens. Frequently, credit reporting agencies will research other items, such as place of employment, banking relationships and previous residency. There are a small number of companies that provide this insurance. Usually, borrowers pay for this insurance as part of the monthly payment.
Lenders require hazard insurance that covers the outstanding loan on the property.
In most cases, the lender is the loss payee on the policy and will receive the proceeds on a claim. The proceeds will then be used to pay for the repairs.