Mortgage structure insurance protects your home’s physical structure and is required by banks when taking a loan.
In this article, we’ll learn what it covers, why it’s important, and how to choose the right policy to safeguard your investment.
What Is Mortgage Structure Insurance?
When taking a mortgage, banks will usually require you to take out two different insurance policies, one of which is structure insurance.
Mortgage structure insurance is known as bituach mivneh lemashkanta (ביטוח מבנה למשכנתא). The insurance covers against damage to the physical structure of the home.
In the US, this falls under the dwelling coverage of a homeowner’s insurance policy. In the UK, this insurance is known as buildings insurance.
Is Structure Insurance Required?
Yes. Banks require this coverage to ensure that the value of the property they are lending money for is protected from unforeseen damage.
While banks require it to protect their investment, it also benefits homeowners by safeguarding one of their most valuable assets.
Why Is Structure Insurance Important?
Your property is one of your most significant assets. If it sustains severe damage due to a covered event, you want to be made whole. This is especially crucial if the property is also your residence.
Without this insurance, you may have to cover costly repairs out of pocket while continuing to pay your mortgage. Worse, if the home becomes uninhabitable, you might need to rent temporary housing, further increasing financial strain. Structure insurance is there to prevent just such a scenario.
What Does Mortgage Structure Insurance Cover?
Structure insurance usually covers damage to the structure from natural events such as flooding, fire, lightning, hail, and earthquake, as well as manmade occurrences such as burst pipes or robbery.
Important: Structure insurance itself does not cover personal belongings. If you live in the property, consider adding contents insurance to protect your possessions.
When Do You Need Mortgage Structure Insurance?
Banks will not release mortgage funds until an active policy is in place. To avoid delays in your mortgage disbursement, have a policy in place before your mortgage signing.
Where Can You Get Mortgage Structure Insurance?
Banks typically offer structure insurance through their affiliated insurance agencies. However, you are not required to purchase it from them. Compare options to ensure you’re getting:
- A competitive premium
- The coverage you want, such as third-party liability or contents insurance
Additional Considerations When Choosing a Policy
- Do you want to have third-party liability insurance? If so, you’ll likely need to take a policy from an insurance company not affiliated with your mortgage bank.
💡 Want to learn more? See Mortgage insurance: Are you covered for third-party liability?
- Are you getting contents insurance? If you are living in the property, do you want to have contents insurance from the same company? In the event of a claim and you have contents insurance with a different company, you may need to make claims with two different companies and pay two separate deductibles.
Disclaimer: I am not an insurance agent. This article is for informational purposes only and should not be considered insurance advice. Consult a reputable, licensed insurance agent for personalized guidance.
Image by Azam Ishaq from Pixabay
