Date: October 2, 2006
For more information contact: Eileen Mallow, Assistant Deputy Commissioner, (608) 266-7843 or eileen.mallow@wisconsin.gov

First-time Home Buyers Face New Insurance Needs

Madison, WI—Buying a home is one of the largest and most important financial decisions most people make during their lifetimes. Going from renting an apartment to owning a house brings different insurance needs.

"Consumers need to protect their investment but the mortgage lender also has an investment to protect." said Jorge Gomez, Commissioner of Insurance. "It is important for consumers to become familiar with the different types of insurance policies that a lender may require as part of the home buying process."

As part of Money Smart Week^SM Wisconsin, the Office of the Commissioner of Insurance (OCI) reminds young families of their insurance needs when buying a home:

• Title Insurance: This policy protects you and your lender if there is a problem in the title or deed after you purchase your home. Such claims can include fraudulent or misrepresented deeds, liens, erroneous interpretations of wills or other encumbrances on the title.
• Homeowner's Insurance: This policy combines property and liability insurance. Property insurance covers damage to your home's physical structure as well as your personal property. Liability insurance protects you and your family members for accidents that injure other people or damage to their property.
• Flood Insurance: Homeowner's insurance does not cover most damage caused by flooding. If your property is located in a Special Flood Hazard Area, your lender will require you to purchase flood insurance. Flood insurance is a special insurance policy written by the National Flood Insurance Program (NFIP). Administered by the Federal Emergency Management Agency (FEMA), NFIP flood insurance covers direct physical losses resulting from floods, flood-related erosion, severe rainstorms, flash floods and mudslides.
• Private Mortgage Insurance: If your down payment is less than 20%, most lenders will require you to carry private mortgage insurance. The policy protects lenders against losses if you default on the home loan. Private mortgage insurance allows lenders to accept lower down payments than would normally be allowed.

Publications such as Buying a Home and Your Insurance Needs and Consumer's Guide to Homeowner's Insurance can be ordered free from the agency by writing to OCI Publications, P.O. Box 7873, Madison, WI 53707-7873, calling 800-236-8517 or visiting the OCI Web site at oci.wi.gov.

Money Smart Week^SM Wisconsin was created by the Governor's Council on Financial Literacy which Governor Jim Doyle formed last year to improve financial literacy in Wisconsin. The first-year campaign is modeled after similar promotions run by the Federal Reserve Bank of Chicago in the cities of Chicago and Detroit. It is envisioned as ongoing from year to year. Wisconsin's initiative has the support of the Federal Reserve Banks of both Chicago and Minneapolis.

Created by the Legislature in 1871, Wisconsin's Office of the Commissioner of Insurance (OCI) was vested with broad powers to ensure that the insurance industry responsibly and adequately met the insurance needs of Wisconsin citizens. Today, OCI's mission is to lead the way in informing and protecting the public and responding to its insurance needs.