Alyssa Lane
Homeowners insurance is not a legal requirement in Washington state. However, if you are buying a home and need a mortgage to finance the purchase, your lender will likely require you to have a basic home insurance policy before closing the financing. This protects the lender against possible losses. If you don't have a mortgage, it is still a good idea to protect your investment and buy homeowner insurance. Home insurance policies in Washington typically include standard coverages such as dwelling coverage, other structures coverage, and personal property coverage.
| Characteristics | Values |
|---|---|
| Is homeowners insurance required by law? | No, it is not required by law in Washington State. |
| Who might require homeowners insurance? | Mortgage lenders usually require buyers to obtain a basic home insurance policy before closing financing. |
| What does homeowners insurance cover? | Homeowners insurance typically covers damage to the home and personal belongings from specific risks, including fires, wind, lightning, and hail. It may also cover other structures that aren't connected to the home, like a fence or shed. |
| What is not covered by homeowners insurance? | Flooding and earthquakes are common risks in Washington State but are typically not covered by standard homeowners insurance policies. |
| How much does homeowners insurance cost? | The average premium for home insurance coverage in Washington was $937 per year, according to a 2020 report by the National Association of Insurance Commissioners (NAIC). However, insurance costs may vary depending on factors such as the value and age of the home, the amount of personal property covered, and area-specific risks. |
| What if I have an issue with my insurance provider? | The Office of the Insurance Commissioner in Washington State provides resources and assistance for consumers with insurance-related questions or complaints. |
| How can I save money on homeowners insurance? | It is recommended to shop around and compare rates from different insurance companies to get the best rate. Discounts and savings may also be available through bundling or recent renovations. |
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What You'll Learn
Homeowners insurance is not required by law
Homeowner insurance property protection protects your home and personal belongings from damage caused by specific risks. For example, in Washington state, homeowners insurance covers fires from most causes, including wildfires. It typically also covers damage to your home from events such as wind, lightning, or hail. You can also purchase additional coverage for things like water backup, identity theft, and stronger materials to replace your roof.
If you don't have a mortgage, it's still a good idea to protect your investment and buy homeowner insurance. When deciding how much and what type of coverage you need, it's best to talk to an insurance agent or broker. They can help you assess factors such as the average replacement cost of a home in your area and how to ensure any improvements or additions you've made to your home are also covered.
Keep in mind that flooding and earthquakes, which are risks in Washington, are not typically covered by standard homeowners insurance policies. However, special flood insurance through the National Flood Insurance Program (NFIP) and special earthquake insurance may be available.
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Mortgage lenders may require insurance
While homeowners insurance is not a legal requirement in Washington state, mortgage lenders may require borrowers to have a basic home insurance policy before financing the purchase of a home. This is to protect the lender against possible losses.
Lenders can acquire forced-placed insurance on the property, but this type of insurance protects the lender and not the seller. If a homeowner does not have coverage when they first finance their home, the bank may take out an expensive lender-placed insurance policy on the property. If a homeowner loses their coverage, the bank can also take out a lender-placed insurance policy to protect their investment.
Homeowner insurance property protection protects the home and personal belongings from damage caused by specific risks. Home insurance policies in Washington typically come with several standard coverages, including dwelling coverage, which helps pay for damage to the home from events such as fire, wind, lightning, or hail. Other structures coverage is intended to cover structures that aren't connected to the home, like a fence or shed. Personal property coverage covers the homeowner's belongings.
It is important to understand the different types of coverages available and what a policy does and doesn't cover. Outbuildings and unattached structures may not be covered by a standard homeowner insurance policy. Additional coverage may be needed if there are multiple structures on the property or if any structures are rented out. Homeowners should talk to their insurance agent or broker to determine how much and what type of coverage they need.
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Lender-placed insurance is expensive
In Washington state, there is no law requiring the purchase of homeowner's insurance when buying a home. However, if buyers require a mortgage to finance the purchase, lenders will likely mandate a basic home insurance policy before closing the financing. This type of insurance is called lender-placed insurance (LPI) or force-placed insurance, and it is typically more expensive than a standard policy.
Additionally, with lender-placed insurance, the lender chooses the coverage provider and amount, and the consumer is obligated to pay the cost. This lack of competition tends to drive up premium prices, as the lender is not motivated to select the lowest price for coverage since the cost is borne by the borrower. Lender-placed insurance policies may also have limited coverage, excluding items such as clothing, furniture, or household valuables, as the lender is primarily concerned with protecting the structure of the home.
The high cost of lender-placed insurance has attracted media attention and regulatory scrutiny. State insurance regulators and organizations like the National Association of Insurance Commissioners (NAIC) have held public hearings and discussions to address concerns about reverse competition, high premiums, and limited coverage. Borrowers who find themselves with lender-placed insurance should ensure they have adequate protection in all areas and consider shopping around for a new policy that meets their budget and lender's requirements.
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Home insurance covers fires, wind, lightning, hail
Homeowners insurance is not required by law in Washington state. However, if you need a mortgage to finance the purchase of a home, the lender will likely require you to have a basic home insurance policy before closing the financing. This type of insurance is to protect the lender against possible losses.
Home insurance provides a range of coverage, depending on the policy type. It typically covers a wide range of natural disasters, including fires, wind, lightning, and hail damage. Fire damage is covered by dwelling coverage, while damage to your belongings is covered by personal property coverage. Home insurance also covers lightning strikes, including fire damage, structural damage, and damage to electronics and appliances. In the case of lightning striking surrounding structures, such as a tree or pole, which then falls on your home and causes damage, this is also covered.
It is important to note that insurance companies may deny claims for lightning strike damage or act in bad faith by delaying or avoiding payouts. Therefore, it is crucial to understand your rights and responsibilities as a homeowner when filing a claim. Additionally, while home insurance covers storm damage, it is the homeowner's responsibility to take preventative measures to reduce the risk of damage. This includes bringing outdoor items inside, securing loose objects, and maintaining gutters and trees.
Home insurance also provides coverage for additional living expenses (ALE) incurred when you cannot live in your home due to covered damage. This includes reimbursement for repairs made to prevent further damage and coverage for expenses such as hotel stays, rentals, and dining out. Comprehensive car insurance may also cover hail damage to your vehicle.
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Special insurance for floods and earthquakes
While there is no law in Washington state that requires the purchase of homeowner's insurance, it is often required by lenders for mortgages. This is to protect the lender against possible losses.
Homeowner's insurance typically does not cover damage from natural disasters such as floods, landslides, and earthquakes. For this reason, it is important to consider purchasing additional insurance to protect your property from these events.
Special Insurance for Floods
In Washington state, you will need to buy flood insurance separately. This may be purchased from a surplus line insurer, which covers risks that other insurers typically do not. Flood insurance may cover damage from some forms of earth movement, including mudflows, flash floods, and water erosion.
Special Insurance for Earthquakes
Earthquake insurance can be purchased separately or added to your homeowner's insurance. It typically covers 10%-25% of the maximum amount your insurance will pay for your building. It is important to note that earthquake insurance may not cover floods, tidal waves, or tsunamis, even when these are triggered by earthquakes. Therefore, it is crucial to understand what your policy does and does not cover before purchasing.
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Frequently asked questions
No, homeowners insurance is not required by law in Washington state.
Yes, if you have a mortgage, your lender will require you to have homeowners insurance. If you don't have coverage, the bank may take out an expensive lender-placed insurance policy on the property.
Homeowners insurance in Washington typically covers damage to your home from events such as fires, wind, lightning, or hail. It also covers other structures that aren't connected to your home, like fences or sheds, and your personal property. However, it's important to note that flooding and earthquakes, which are common risks in Washington, are not usually covered under basic policies.
