Getting ready for your first home can be exciting, but before its keys are officially yours, you will need to acquire a home insurance policy. When unexpected disasters strike, having home insurance can protect your investment and save you from financial hardship, giving you the funds you need for sudden bills.

Purchasing the right home insurance plan is a key decision for first-time buyers. It’s important to carefully evaluate your options to get the best coverage for your home’s protection and for your peace of mind.

Do I Need Home Insurance?

Mortgage lenders usually require homeowners insurance before they fund a home loan. This is because when you have a loan with a lender, they essentially invest in your home and want to ensure its protection against potential damage or destruction from unforeseen events, such as inclement weather.

If you bought your property through other means, or if you already paid off your mortgage, homeowners insurance may still be worth considering to safeguard you and your investment from any future risks.

So, what does homeowners insurance typically cover? Here are some common areas:

• Your home should it ever need repairs or reconstruction
• Your personal belongings in the home
• A place to stay if your house needs to be repaired or rebuilt
• Legal fees if there is a case of liability

Understanding the Cost of Home Insurance

The average monthly price can range from $80-$1,655. However, keep in mind the cost of home insurance may vary based on several factors. It is determined by you as a homeowner or other factors outside of your control, such as aspects of your home. Typically, if the insurance company sees any quality about you or your home that is prone to risk, then you can expect to pay more than the average homeowner.

Cost Factors

Here are some factors that insurance companies will be looking at and that you should take into account when shopping for home insurance:

• Location: Rates will differ by region or ZIP code. If natural disasters occur often, you will pay more than in calmer areas. Living in coastal areas or neighborhoods with a high crime rate can also be a major consideration for your insurance rate.
• Physical Characteristics of the Home: Homes built with durable construction materials like brick or concrete may be less expensive to insure than those made with wood.
• Age of Home: Older homes may be more expensive to insure due to outdated systems with a higher likelihood of repair or replacement.
• Your Credit History: Insurance companies, except in states like California, Maryland, and Massachusetts, often consider your credit score, as it can indicate financial responsibility.
• Marital Status: Married homeowners may get lower rates, as they're statistically seen as lower risk. However, states like Hawaii and Massachusetts do not allow marital status to influence rates.

Ways To Lower Your Home Insurance Costs

Discounts are a way to reduce how much you pay for home insurance. One way to find out if you qualify for any discounts is by simply connecting with an insurance agent and asking them to review your case.

Some common discounts include:

• Home Improvement: Insurance companies like upgrading your home’s electrical, HVAC, plumbing, or any other physical components.
• Newly-Built Home: Due to newly constructed homes posing less risks, you may qualify for this discount.
• Home Safety Measures: Homes with security systems or updated alarms may receive discounts for mitigating the risk of damage.
• Insurance Policy Bundling: Some insurance companies also offer auto insurance. When you buy both your auto insurance and home insurance from the same company, you might be able to save on both policies.
• Military Affiliation: Depending on the company, they may offer former or current military members a reduced price.
• Other Occupations: Discounts may be available for first-responders or teachers.

Steps To Obtaining Home Insurance

Step 1: Determine Your Coverage Needs

Start by figuring out how much coverage your home needs. This includes evaluating the cost to rebuild your home in case of total loss, which could be higher than its purchase price due to local construction costs. Then think about additional coverage for valuable personal belongings like electronics, appliances, or jewelry that may not be fully covered under a standard policy. You may also consider the specific risks of the area your house is in such as floods, earthquakes, or fires, and whether you need extra protection for those risks.

Step 2: Research and Compare Providers

Focus on finding insurance companies with strong reputations, financial stability, and solid customer reviews.

One way to go about this is by using the company’s online tools to compare rates. You may get more in-depth information when you call them directly and ask about their packages. As you find out each company’s rates, keep a record of all the quotes you receive in a spreadsheet or document. You can also consult a licensed insurance agent to help narrow down your options.

Compare multiple quotes, paying attention to the company’s claims process, customer service reviews, and how well they handle payouts. Asking for recommendations from friends or family members with good experiences can also guide you in selecting reliable providers.

Step 3: Evaluate Policy Details

Once you’ve shortlisted a few providers, carefully examine the policies they offer. Review coverage limits, deductibles, and any exclusions that apply to specific events like natural disasters or theft.

Check whether the policy includes additional benefits, such as coverage for temporary living expenses if your home becomes uninhabitable. Also, make sure to understand how claims will be handled—whether based on the replacement cost or the depreciated value of your belongings.

Step 4: Complete the Application Accurately

After selecting the best policy for your needs, complete the application with accurate details about your home, such as its age, construction materials, and any renovations. Insurers may ask for information like your credit history or details about safety features, such as security systems or smoke alarms. Ensure all information is accurate, as discrepancies can affect your premium or cause complications down the road.

Step 5: Set Your Start Date and Finalize the Policy

Align your insurance start date with your home purchase closing to ensure immediate coverage. Before finalizing, review the policy’s terms. Look over the coverage amounts, deductibles, and exclusions to make sure everything is accurate. Once confirmed, keep a copy of your policy and related documents in a safe place for easy access.

Conclusion

Securing home insurance ensures your investment is protected from unexpected events that could result in costly repairs. With the right policy, you’ll safeguard your property and personal belongings, providing peace of mind as you settle into your new home.