Home value protection is a supplemental insurance product designed to protect homeowners whose properties may have dropped in value. When the housing market experiences a decline, this type of insurance can provide policyholders with predetermined payouts when their homes are sold at prices below their previously determined values.
How It Works
When home value policies are issued, amounts of insurance coverage are established that typically equal each insured property’s current market value. These amounts are often called protected values. When policyholders decide to sell, the values of their properties can be professionally reevaluated. If the homes sell for less than their protected values, insurance claims may be initiated and processed. Policyholders may then receive payouts based on the terms of their coverage.
How It’s Priced
Homeowners who purchase home value protection are usually assessed monthly premiums. Premiums are generally based on protected values and consider factors such as payout percentages, waiting periods and lengths of coverage.
Why It Matters
The purchase of a home can be one of a family’s largest investments. Because the housing market can fluctuate dramatically in a relatively short time, protecting this investment against loss of value can be a wise risk-management decision. Whether choosing to move is the result of long-term planning or is due to unforeseen changes in personal circumstances, homeowners whose home values are insured can experience more flexibility and greater peace of mind whenever it’s time to sell, regardless of market conditions.