What Is Residual Homeowners Insurance?
Residual home insurance is not something many people hear of when it comes to buying a policy. Generally, home insurance policies are standard and rather easy to get if you own a home. Some property owners may struggle to obtain insurance, though.
Let’s say you decide to buy a home. You qualify for a mortgage, find the home of your dreams, and buy it. But, then you learn you do not qualify for home insurance in its traditional form. What should you do? This is where residual home insurance might be able to help you.
When Do You Need It?
Many property owners need a secondary option when they do not qualify for traditional home insurance. Various factors can lead to this need including:
- You have a very high claims history.
- You are a high-risk property owner. This means there are risks present that make it hard for insurance companies to offer coverage.
- The home may have some type of limitation that limits coverage for it. Certain features might limit the coverage you can get.
No matter why you receive a denial of coverage from typical insurers, residual coverage may be available to you.
When Is It Available?
Residual home insurance is usually a state-run program. It is an option provided to individuals who do not qualify for other policy types.
That does not mean you will have a policy from an unknown provider. In this state-run program, numerous insurance companies come together to offer coverage. They help share the deficits and surpluses related to homes with this coverage. It helps minimize your risks by providing you with coverage. It minimizes the risk to the insurance company by diversifying provisions. Coverage may have numerous limitations. It can cost more to obtain coverage in this way. Higher risk-based rates are common here.
Some states require insurance companies to participate in this residual market. It helps to offset some of the risks to just one provider. It also helps ensure that access to quality home insurance is available to all homeowners.
You may not be able to obtain home insurance in this manner. The access to this coverage differs from one state to the next. If your home insurance agent told you it could not provide coverage to you, this may be an option for you. Ask about the residual home insurance market. Doing so could help to alleviate some of your financial concerns. It can help you protect your home even when other options do not exist.