There is a new insurance coverage for homeowners that will guarantee the value of your home. The new insurance policy, being offered by Home Value Insurance Company, is designed to insure homeowners against losses if their home has depreciated when it's time to sell.
The new insurance has just rolled out, starting in Ohio, then continuing to expand in other states. This coverage is regulated by the state Department of Insurance, and can only be sold by a licensed insurance agent.
Here are the highlights of the new policy:
• Any homeowner can buy a policy, typically at $20 a month for every $100,000 of value.
• The current home value is determined by the sale price of the home, if purchased within the last year, or an appraised value. The value would be locked in for a 10 year period.
• The insurance premium won't go up by more than 5 percent a year.
• If the homeowner sells at a loss at some point in the future, the insurance will pay up to the percentage of value lost, according to the nationally regarded Standard & Poor's Case-Shiller index. So if a community lost 20 percent of its value over recent years, the owner of a $200,000 home who sold at a loss could file a claim for up to $40,000.
• There are high deductibles the first two years: 10 percent the first year and 5 percent the second year. The purpose of this is to deter flipping.
Based on the information provided thus far, it would seem that a homeowner that may consider selling within the next 5 years would benefit the most from such an insurance coverage. This would be an option for those who relocate for work, foresee an event that will cause them to move in the short-term, or protect from unforeseen events that will require a home sale.
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