13 Jun What is REO Insurance
If you have ever spent any time looking at all the types of insurance coverage available to property owners, you have seen the standard “home owner” and “hazard,” policies, among many other types. These standard policies ensure that you, as the home owner, are always covered for any damages. However, there is another insurance type not quite as commonly known—REO Insurance.
What Is REO Insurance?
REO (Real Estate Owned) Insurance is designed for an REO property which has gone through the foreclosure process, and where the mortgage lender or bank is now the owner. Coverage activates when damages occur without a traditional homeowner living at the residence. These types of policies, (REO policies) have different meanings in real estate, based on the property’s individual situation. REO policies can provide many types of coverage.
A home can be vacant for several reasons, including an extended escrow period or lulls in the rental market. When the property is vacant, it becomes vulnerable to break-ins and other damage. Unoccupied property insurance covers many damages, for instance, from broken windows to theft of copper wiring. Investors or lenders simply file a claim to resolve any damage situation.
REO Insurance Protection Against Vandalism
A property may sit unoccupied for many weeks or months. People passing by the property during this time period might be tempted to vandalize the home. Graffiti, rocks thrown at the windows, and other problems might plague the property. Unoccupied property insurance will cover these damages, once reported. The damaged items can be quickly fixed or replaced, in order for the property to be shown to prospective buyers.
Natural Disaster Damages
Earthquakes, high winds, floods, and fire are all devastating disasters that can affect any property. When an investor or lender purchases insurance for natural disasters, it is especially important to read over all of the details it covers. Some items may not be included in the policy. Only sign the document when the proper disasters are adequately covered. Improper insurance coverage will only cause more financial hardships for an investor.
Injuries on Property
If anyone walks onto the property and becomes injured, the lender or investor is liable for damages. However, REO liablity policies can cover injuries at the property. Real estate agents, contractors, and trespassers are all covered in these policies. Without insurance coverage, medical bills alone can significantly impact an investors’ financial situation.
Let Us Help
If an investor or bank is unsure about the need for unoccupied property insurance, a consultation with an APIA professional should be arranged. An insurance expert can determine whether a property requires REO insurance or not. In the end, it’s always better to have slightly more REO coverage than necessary for those unexpected damages.