Loan Amount VS. Insured Amount: What coverage is needed?

Straight forward home insurance plans and loan contracts are not easy to understand. Examining the contrast of the two makes it easier to choose the right defense.

Loan Amount vs. Insured Amount

Understanding loan amount requires a quick once over on what it means. The term refers to the sum of funds that someone borrows and makes an agreement to pay back in full. The borrowed money often encompasses more than the obtained amount.

Loan fees, closing costs, and additional expenses are quiet cash drains that most do not notice at first glance. The loan amount differs quite a bit from the insured total. Reading and understanding home insurance policies is a priority and the best plan of action for any person with insurance.

Insurance experts serving Tulsa, OK, American Founders Insurance Group Inc. answers questions regarding the topic in clear and concise terms.

Breaking Down the Basics

Always consider the money going towards a home insurance premium versus what the monetary outcome of a claim is.

For example, a claim’s amount is $20,000 while the loan repayment is twice that amount.

Full protection requires gap homeowner insurance to make up the difference in the loan amount and insured total.

The protections, deficits, and loans work the same way whether it is an auto insurance policy or homeowners’ insurance.

Everyone Is Unique

Family budgets decipher what is best in the end. The benefit of securing coverage for the loan amount ensures claims are available in full. This protects both the lender and the borrower.

However, it comes down to the precise amount of coverage each person needs. For example, in Tulsa, OK, American Founders Insurance Group Inc. serves to provide whatever information is pertinent to home insurance. 

Examining existing homeowner policies ensures every year sees a quality result to the policy holder’s bottom line. Contact our office to have your questions answered and to get a quote.