First-Time Homebuyer Insurance

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Home ownership is vastly different from renting a property, and it comes with additional responsibilities that you need to consider. One major part of becoming a new homeowner is purchasing home buyers insurance to protect your property.

If you’re looking for first-time homeowners insurance, you might have a few questions about how to purchase a policy, what type of coverage to look for and how much it might cost. We’re here to help with all the information you need about first-time home buyer insurance.

The cost of home buyers insurance

The average cost of a homeowners insurance policy in the United States is $1,288 per year. But this is an estimate, and the actual amount varies on many different factors. Here are a few parameters that will go into determining how much you pay for first-time home buyer insurance:

  • Location: The state you live in plays an enormous role in the cost of homeowners insurance. For example, the average policy costs $2,979 per year in Louisiana, but just $642 in Oregon. You’ll also usually pay less if you live close to safety features like fire hydrants and police stations.
  • Home value: A $200,000 home will be much cheaper to insure than a $600,000 home because the replacement value is much lower. As a general rule, the higher your budget when home shopping, the more you should allot for an insurance policy to protect your new residence.
  • Deductible: Your deductible is the amount you pay out of pocket before your policy begins covering the cost of repairs or replacement. The lower your deductible, the more you’ll pay in premiums each month – and vice versa.
  • Personal information: Some of the personal details you give to a home insurance provider when getting a quote are used to determine how much you pay for your policy. Examples include your credit score and renters insurance claims history.

The best way to determine the cost of home buyers insurance for your new home is ask for quotes from several providers. Once you’ve compared multiple policies, you should have an idea for how much to include for insurance in your home purchasing budget.

When to buy homeowners insurance

At what point in the home buying process should you purchase your first-time homeowners insurance policy? While there’s no hard and fast deadline on signing up for home insurance, we have one major piece of advice: don’t leave it until the last minute.

Before making an offer on a home, you should know about how much insurance will cost by asking for quotes from providers using an estimated purchase price. This will help ensure there aren’t any surprises when it’s time to buy coverage.

When you’re within a month of closing, start getting more serious about gathering quotes and choosing the provider and coverage you want to go with. Aim to have a policy in place around a week before closing. Your lender may want proof of coverage up to a few days before the scheduled closing date, and not being able to provide proper documentation could delay the sale.

How to determine the amount of home insurance coverage you need

Home buyers insurance policies can be tailored and fine tuned in each area of coverage to meet your exact needs. But how do you determine what those needs are?

The most important determining factor in the amount of home insurance coverage to purchase is the requirements from your lender. Ask your mortgage company what their minimum coverage requirements are before purchasing a policy to make sure your bases are covered.

However, you may need more coverage than the minimums put into place by your lender. Here’s a set of steps to help determine how much homeowners insurance you need as a first-time buyer:

  • Find out what your new home’s market value is
  • Research local building costs to see how much it would cost to replace the home
  • Make sure your new home meets local building codes
  • Take inventory of the furniture and belongings you intend to move into the home
  • Think about how many people will visit your home and how often
  • Find out what your local living costs would be if your home became temporarily uninhabitable

After you’ve done that, evaluate how much you can afford for your deductible and if you want any add-on coverages such as flood insurance or an extra coverage option called a rider that protects expensive items like jewelry, art or instruments.

How to get the best first-time homeowners insurance rate

The more quotes you get from home insurance providers, the best chance you’ll have at getting the most competitive rate available. Make sure you’re only comparing quotes for policies with identical coverage amounts, otherwise you won’t get an accurate analysis.

You can also save on your first-time homeowners insurance policy by purchasing multiple types of insurance coverage from the same provider. This process, known as bundling, involves using the same insurer for your home, auto, life or other types of insurance coverage. If you already have an existing auto insurance policy, ask for a home buyers insurance quote from your current provider to compare against other insurers.

Don’t forget to ask about any other discounts you might be eligible for.

How to keep your homeowners insurance rate low

Once you’ve signed up for a first-time home buyers insurance policy, the last thing you want is for your rate to go up. There are many proven ways to keep your insurance rates low:

  • Invest in disaster-proofing upgrades like storm shutters or a modernized electrical system
  • Keep your credit score high
  • Stay with your insurer to take advantage of loyalty discounts
  • Review your policy annually to see if any updates are needed

Buying home insurance can seem overwhelming at first, but it’s not difficult if you do your research and start with the essentials. By following this guide, you can be sure that your home will be protected.