Buying a home is one of the biggest investments you’ll ever make and protecting that investment with the right homeowner’s insurance (also referred to as hazard insurance) is just as important as finding the right mortgage. Many homebuyers wait until the last minute to shop for coverage, but taking the time to compare policies early in the process can save you money and stress. Here are some tips to help you shop smart for homeowners’ insurance:
Start Early
Once you’re under contract on a home, your lender will require proof of homeowners insurance before closing. Don’t leave this to the last week—begin shopping as soon as you know which home you’re buying. This gives you time to compare quotes and ask questions without feeling rushed.
The homeowners insurance policy premium is factored into your monthly payment (whether you have it included in the payment or if you pay it annually) so the lender needs to know the premium amount for qualifying purposes as it’s factored into your debt ratios.
It’s also important to start early as it may take additional time if the home had previous claims on their insurance policy, if it’s a unique home or is considered a higher risk due to the area or home type.
Understand What’s Covered
Homeowners insurance typically includes coverage for:
- Dwelling – Repairs or rebuilds to your home’s structure if damaged by a covered peril (like fire, wind, or vandalism).
- Personal Property – Coverage for belongings inside your home, like furniture, clothing, and electronics.
- Liability Protection – Protection if someone is injured on your property or you cause accidental damage to others.
- Additional Living Expenses – Helps cover costs if you need to live elsewhere during home repairs.
Be sure to ask about exclusions (such as flooding or earthquakes) and whether you’ll need additional policies or riders. NOTE: Before you opt for additional coverage, such as earthquake, make sure that you discuss the deductible and that you have enough funds to cover the deductible, which is often steep.
Shop More Than One Provider
Rates and coverage can vary significantly between insurance companies. It’s wise to request quotes from at least three insurers. Compare not only the premiums, but also:
- Deductibles
- Coverage limits
- Customer service ratings
- Claims process reviews
Sometimes the cheapest option isn’t the best long-term value.
Ask About Discounts
Insurance companies often offer discounts that can lower your premium. Some common ones include:
- Bundling home and auto policies
- Having a monitored security system
- Living in a gated community
- Being a non-smoker
- Upgrades like a new roof or updated wiring
- It never hurts to ask what savings are available.
Consider Your Deductible
Your deductible is the amount you’ll pay out of pocket before insurance kicks in. A higher deductible usually means a lower premium, but make sure you’d comfortably be able to cover it in case of a claim. When deciding on the amount of your deductible, think about how large a loss would need to be before you would submit a claim to your policy and how much funds you have to cover the deductible. For example, if your deductible is $1,000 and you’ll probably cover any losses up to $5,000, your deductible may be too low and you may be paying too much for your policy. Or if your deductible is $5,000 and you have $1,000 available to cover your deductible, you may want to consider lowering it.
Check the Company’s Reputation
Not all insurers handle claims the same way. Research the company’s customer satisfaction ratings, financial strength, and reviews from other homeowners. A quick quote may sound good, but you want an insurer who’s reliable when it matters most. Just like a mortgage rate quote, the lowest quote doesn’t always mean that’s the best for you in the long run if the company doesn’t perform.
Review and Reassess Annually
Even after closing, it’s smart to review your policy every year. As your home’s value changes, or as you make updates and improvements, your coverage needs may shift.
Bottom Line
Just as you shop around for your mortgage, you should shop around for homeowners insurance. Start early, compare carefully, and look beyond just the price. The right policy will give you peace of mind knowing your home—and your financial future—are well protected.
Please contact me if you would like a spread sheet to help compare homeowners insurance providers or if you’re thinking about buying (or refinancing) a home!
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