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What is Homeowner’s Insurance?

Homeowner’s insurance pays for losses and damage to your property if something unexpected happens, like a fire or burglary. Your homeowners insurance may also cover the contents of your home and provide personal liability coverage. Standard homeowner’s insurance doesn’t cover damage from earthquakes or floods, but it may be possible to add this coverage. 

Homeowner’s insurance also protects your lender’s financial interest in the property. This is why lenders require proof of homeowner’s insurance. 

Choosing your insurance provider is up to you, as long as the provider is licensed and authorized to do business in your state, and the policy meets the property insurance requirements for your loan.

Other Types of Insurance

Wind insurance: insures your home against damage from wind and/or hail. These risks may be covered under your homeowner’s insurance policy or may require a separate wind policy depending on the insurance provider you choose. 

Flood insurance: federal law requires flood insurance for mortgaged properties located in special flood hazard areas. These areas are identified on flood maps produced by the Federal Emergency Management Agency (FEMA).

Lender-Placed Insurance

If you are unable to obtain insurance or do not maintain homeowner’s insurance, lenders must obtain coverage on their behalf to prevent against uninsured losses. This is called lender-placed insurance. Lender-placed insurance is usually more expensive and only covers the lender, not you. Therefore, it does not cover the contents of your home or protect you from theft or personal liability.

ServiSolutions Mortgagee Clause

ServiSolutions, a division of Alabama Housing Finance Authority ISAOA ATIMA
PO Box 242967
Montgomery, AL 36124

FAQs about Insurance

How much insurance do I need?
The terms of your mortgage require enough insurance to cover at least 100% of the estimated replacement cost for your home and any improvements to your property. However, that may not be enough to protect you financially. Ask your insurance agent if you also have enough coverage to protect you from personal liability for accidents that occur on your property, and to replace your personal property if it’s damaged, destroyed or stolen.

Why does ServiSolutions require at least 100% replacement cost coverage?
As your servicer, ServiSolutions also has a financial interest in the property. Replacement cost coverage ensures your home can be repaired to the original condition.

Can I just let my policy lapse and get a new one later to save money?
No. We monitor your loan to make sure you maintain continuous homeowners insurance coverage for the entire term of the loan, without letting it lapse for any period of time. Any lapse will result in lender-placed coverage.

Will ServiSolutions purchase lender-placed insurance without my knowledge?
No. If we find a problem with your insurance or don’t receive acceptable proof of insurance, we’ll send you a letter explaining the steps you need to take.

How will I be billed for lender-placed insurance?
If ServiSolutions purchases lender-placed insurance on your behalf, we will include the premium in your monthly mortgage payments. Premiums for lender-placed insurance will be paid from your escrow account. If this causes a shortage, your escrow account may be analyzed and your payment adjusted to reflect the new insurance premium amount.

Can I cancel lender-placed insurance?
When you provide proof of acceptable coverage, we’ll cancel the lender-placed policy and charge you only for the time it was in place.

When is homeowners, flood and/or wind insurance paid? 
Upon receipt of the bill from your insurance company, we will pay your insurance annually on or before the renewal date that is listed on your policy.

What if I decide to change insurance companies?
If you are changing insurance during your renewal term, call Customer Service and let us know. If you are changing insurance companies mid-term, see the below question.

What is a midterm policy change?  
This is when you make changes that may affect your insurance premium outside your renewal period. If changes are made midterm you will be responsible for requesting a refund for any used premiums from your previous provider and making payment in full to your new provider. Your new provider may forward ServiSolutions proof of payment along with the evidence of insurance or declarations page to the attention of the Insurance department. You will be subject to a $7.50 midterm policy change fee. If you wish to have your monthly payment adjusted due to the change please send a written request for an escrow analysis to be completed.

If I have any changes to my homeowner's insurance policy, where can I send it?
P.O. Box 242967 
Montgomery, Al 36124 
EMAIL: [email protected] 
or Fax to: 334-460-1947

For any insurance-related questions, please contact [email protected]