While Connecticut doesn’t require you to purchase homeowners’ insurance, your bank can, and that remains perfectly legal. It goes back to the federal deposit insurance that each bank carries.
As long as you maintain a mortgage on your Monroe, CT home, you’ll need to maintain a homeowners’ insurance policy from Fida Insurance Group. That’s because the bank must require the insurance to protect itself from the risk of loaning out the funds it insures through the Federal Deposit Insurance Corporation (FDIC).
The FDIC protects all of the money in the bank. That means it protects the money you deposited, that your next-door neighbor deposited, and that the dry cleaning business you use deposited.
It may sound like that double insures things, and it does. The FDIC insures the deposits to the bank, but when the bank loans the money, it no longer sits in its vault. The FDIC insurance covers the money in the bank. That means the bank needs to make sure that you can pay your mortgage if something happens to your home to damage it.
Repairs to homes cost a lot, which could negate your mortgage payments. By requiring you to carry home insurance, the bank alleviates its risk of loaning you the money.
This may seem like passing the buck, but the federal government alleviates bank risk by offering insurance, and the bank alleviates its risk by requiring insurance. The upshot of the insurance requirements results in loans, so more people can buy homes and experience the security of homeownership.
When you visit Fida Insurance Group serving Monroe, CT for insurance for your home insurance, we’ll help you choose the right type because home insurance comes in eight different types. Call us today for coverage.