Definition: Property mortgage insurance (also known as a homeowner’s policy) refers to an insurance cover offered by homeowners to protect their home from loss or damage caused by natural disasters such as earthquakes, fires, floods or storms. This coverage is typically provided by an insurer who owns a property and has been granted a mortgage on the property. The primary purpose of this type of insurance is to ensure that the owner retains control over their home in case of an incident causing damage to it, rather than placing all risk onto the lender. The cover offered through this policy may include various types of coverage such as partial loss or complete loss (when a specified percentage of the original value has been lost), and might also include provisions for additional protection, such as home improvement insurance or earthquake cover. Understanding the concept is important because it helps homeowners understand their insurance options and how they can effectively use this coverage to protect against unexpected costs.
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