We’re continuing our discussion of job loss insurance. It’s a different kind of coverage from homeowner insurance or auto insurance in terms of benefit triggers and maximum payments. Florida home buyers would come upon it when working with a mortgage lender, homebuilder or developer. The insurance will pay the mortgage if the borrower loses his job.
Generally, the policy will cover the principal and interest portion of a mortgage payment for the first six months of unemployment. The homeowner would be responsible for the property taxes and insurance. Only a handful of companies cover the entire mortgage payment, and almost all plans have a maximum payment amount, estimated at between $2,000 and $2,500 per month. Tor the most part, the coverage will only be in place for one or two years.
But, unemployment events come in many shapes and sizes. Most policies require the homeowner to have applied for and been granted state unemployment benefits. If the homeowner is dismissed for cause, both the state and the insurer will turn him down. To protect the lenders and insurers, the policies require that a homeowner did not know of the layoff before the closing date.
Self-employed, temporary or seasonal workers beware: You may not be eligible for benefits at all.
The closing date starts the clock on a 60-day waiting period for some plans. If the homeowner loses his job in that time, the coverage won’t kick in. Also, the first insurance payment generally isn’t made until 30 days after the date of unemployment.
We’ll wrap up this discussion in our next post.
Source: Miami Herald, “Protection plan for borrowers,” Kenneth Harney, 03/27/11Share