Unemployment and Homeowners Insurance Policies

If you suffer unemployment and homeowners insurance policies seem out of reach, the situation may seem dire. Unemployment often leaves little room for paying bills beyond the bare necessities. Government programs and insurance policies can help you pay medical expenses and the mortgage on time, but things like homeowners insurance are not protected. Allowing your homeowners insurance is not a viable option, though. If disaster does strike, you could be without a home and stuck with even more expenses than before.

Mortgage lenders require homeowners to have homeowners insurance. If there is a disaster, the lender wants to ensure that they still have collateral on the loan. If your homeowners insurance policy lapses, the mortgage company will purchase a policy on your behalf and pass the payments on to you. The premiums for these policies are often significantly more expensive than an independent policy.

No one expects to fall victim to a lay-off or firing. Still, like when adding garden decorations, planning ahead is your best strategy to avoid one day choosing between homeowners insurance and other bills. Every family should have three to six months of living expenses saved, including insurance payments. It is also a wise idea to purchase Mortgage Unemployment Insurance. This policy insures your mortgage payment if you are laid off, getting one bill off your plate during a budgetary crisis.

Ways to Save

If you have not taken measures to save and insure your mortgage payment, you will need to take a close look at all of your expenses to be sure the necessities are paid. And for homeowners, insurance is a necessity. Once you have cut the non-essentials, try lowering your other bills. One way to lower the premium on homeowners insurance policies is to raise the deductible.

The deductible is the amount you agree to pay out-of-pocket for repairs and other expenses before the insurance coverage kicks in. Raising the deductible means you assume more risk if there is a disaster, and the insurance provider rewards you with lower monthly payments. This should only be a temporary fix, and it is still a very risky option. If your house is damaged by fire or other peril, you will have to pay a hefty out-of-pocket amount for repairs before you see any insurance money.

Other ways to save on your monthly premiums include changing companies for better rates, insuring your home and car with the same provider and seeking out all possible discounts. Ask about loyalty discounts and reductions for making recent improvements. Getting rates as low as possible will reduce some of the burden of bills.

Escrow Accounts

Your escrow account might serve as a short-term stop-gap for your homeowners insurance payments. Many homeowners open an escrow account held by a neutral third party when they close on a mortgage. The homeowner makes an initial deposit and monthly payments, which are then used to pay property taxes and homeowners insurance policies. They are convenient for homeowners because, rather than make a few large annual payments for premiums and property taxes, the payments are spread evenly over 12 manageable monthly installments.

Escrow accounts have built-in cushions so if you miss a payment to the escrow account, the insurance and property tax are still paid on time. If your premiums are raised, the cushion can also cover the difference. Federal law prohibits mortgage lenders from requiring more than two months of escrow expenses be paid in advance, so your homeowners insurance coverage will last, at most, two months that you are unable to pay due to unemployment. Unemployment and homeowners insurance policies can be managed with careful planning and strategic moves to reduce rates.

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