New Law Ensures Lower Pennsylvania Home Insurance Rates

Imagine having to pay for something you could never, ever use.  That’s what was happening to Pennsylvania homeowners, who were being forced to purchase home insurance that included the value of the land.  But now, thanks to the Mortgage Property Insurance Coverage Act, buyers of Pennsylvania home insurance will no longer have to buy this useless coverage

How the New Home Insurance Law Works

For example, if a home was worth $150,000, sitting on a $50,000 piece of land, the homeowner had to buy a $200,000 policy. Since the land wouldn’t be lost during a fire or tornado, there’s no reason to pay that extra premium. Most mortgage companies required homeowners to purchase a $200,000 policy anyway, but  the new law now limits the requirement to the value of the structures on the land, like the house, garage, tool shed, etc.

The group behind the law was actually Insurance Agents & Brokers, a trade association of insurance people, who were frustrated that consumers had to pay for insurance they would never use.  In a competitive business like insurance, having the best rates can make the difference between closing a sale or not, so having their hands tied by the mortgage lender’s requirements was a real problem.

This new law is a good lesson for every homeowner, whether you live in Pennsylvania or not.  Check each home insurance policy thoroughly to make sure that the coverage is based on the value of the structures on the land, not the full property value.  Since land can represent 25% of the property’s value or more, this can become a huge source of savings.