Most banks and financial institutions will want to ensure that your home is covered by a comprehensive homeowners policy. This is a type of policy that covers the dwelling against all risks of physical loss or damage. While a Comprehensive Homeowners policy doesn’t cover every possible type of loss, they are certainly the type that covers the most. It is for this reason that the bank prefers this type of coverage.
It is also very common for the bank to require that your policy contains ‘Guaranteed Replacement Cost’. This is an inexpensive, optional endorsement that states the insurance company will pay whatever amount is required to rebuild your home after a total loss, regardless of whether this cost exceeds the limit displayed on your policy documents. Guaranteed Replacement Cost also includes the expense of removing the debris from your existing home. This is a great coverage to have, the cost of removing wreckage and constructing a new home from scratch can often be difficult to estimate given the number of potential variables. Guaranteed Replacement Cost truly gives a homeowner (and their bank) peace of mind.
Your broker can help you determine if this endorsement is available for your home.