Buying a home is exciting, especially when it’s your first home. And now, with the Federal Reserve’s recent interest rate cuts, more people will now be able to afford to purchase their first homes. However, along with the thrill of homeownership comes a list of new responsibilities, including finding the right homeowner’s insurance. Understanding what homeowner's insurance covers, the options that are available to you, and how to get started can feel overwhelming, so Navisure Insurance Group has put together this guide to help you make informed choices as a first-time buyer.

Homeowner’s Insurance 101

What is Homeowner’s Insurance?

Homeowner's insurance is a type of property insurance that covers losses and damages to your residence and the assets in the home. It also provides liability coverage against accidents that occur on the property. This means if something unfortunate happens — a fire, theft, or someone getting injured on your property — your policy can help cover your costs. It is similar to renter’s insurance, but with additional coverage for the home itself.

Why Do You Need It?

Nearly all mortgage lenders require proof of homeowner's insurance before finalizing a loan, because it protects their investment in the home. However, even if you intend to purchase a home outright, insurance is a wise investment. For most Americans, their home is their largest financial asset and the key to their household wealth. The loss of that asset would be financially devastating.

What Does Homeowner’s Insurance Typically Cover?

Homeowner's insurance includes coverage in four major categories:

Dwelling Coverage: Protects the structure of your home, including walls, floors, roof, and built-in appliances, against covered perils (such as fire, windstorms, or vandalism).
Personal Property Coverage: Covers your personal belongings within the home, like furniture, electronics, and clothing, in the event that they are damaged or stolen. It’s worth noting that high-value items like jewelry may need additional coverage.
Liability Protection: Provides protection if someone is injured on your property or if you accidentally damage someone else’s property.
Additional Living Expenses (ALE): If your home is damaged and you need to temporarily live elsewhere, ALE helps cover extra costs like hotel bills and meals.

Step-by-Step Guide to Getting Homeowner’s Insurance

Here’s a quick roadmap to help you choose the right homeowner’s insurance:

1. Start Early in Your Home-Buying Process

If you want to avoid delays in closing on your new home, start looking into homeowner's insurance as soon as you’re under contract to buy a house. Lenders typically require a policy to be in place before closing, so you want to get that taken care of right away.

2. Evaluate How Much Coverage You Need

Work with your real estate agent or lender to determine the replacement cost of the home, which is the amount it would take to rebuild it from scratch. Replacement cost is different from market value, which includes the price of the land and may vary based on the local real estate market. Make sure you have enough dwelling coverage to rebuild your home in the event of a total loss.

3. Shop Around for Quotes

Prices and coverage options can vary significantly between providers, so it’s worth shopping around. Try to get quotes from at least three insurance companies. Make sure each quote includes comparable coverage amounts and deductibles so you can make an apples-to-apples comparison.

Working with an independent insurance agent like Navisure Insurance Group can simplify this step because the agent has access to multiple carriers and is more likely to find policies that offer the right coverage at a more competitive price. This saves you time, effort, and any confusion about those apples-to-apples comparisons. The insurance industry is, unfortunately, quite complex.

4. Understand Policy Options and Endorsements

Not all policies are created equal, and you may need extra protection depending on your home’s location and your personal needs. For example:

Flood Insurance: Standard homeowner's insurance doesn’t cover floods. If you live in a flood-prone area, you may need to purchase separate flood insurance.
Earthquake Insurance: Like flood insurance, earthquakes are not typically covered in a standard policy and may require a separate policy.
Personal Property Riders: If you have high-value items, such as jewelry or fine art, you may need additional coverage.

5. Check Deductibles and Premiums

Your deductible is the amount you are required to pay out of pocket before your insurance pays, and your premium is what you pay regularly (usually monthly or annually) for the policy. Typically, the higher the deductible, the lower the premium. Choose a deductible that you’re comfortable with, but make sure you can afford it in case you need to file a claim.

6. Bundle with Other Policies for Discounts

Many insurers offer discounts if you bundle your homeowner's insurance with other policies, such as auto or life insurance. This can be a great way to save money and keep your policies in one place for convenience.

7. Understand Exclusions and Limitations

Every policy has exclusions — situations or types of damage it won’t cover. Make sure to read your policy carefully to understand what’s excluded, such as flooding or normal wear and tear. If anything seems unclear, ask your insurance agent for clarification.

8. Finalize Your Policy Before Closing

Once you’ve selected a policy, your insurance provider will typically send proof of insurance to your lender. This will allow you to close on your home. Be sure to confirm with both your insurer and lender that everything is in place.

Tips for Managing Homeowner’s Insurance as a First-Time Buyer

Review Annually: Check your policy annually to ensure your coverage still meets your needs. Home improvements, appliance upgrades, or buying high-value items may require policy adjustments.
Take Inventory: Keep an updated list (and photos) of your personal belongings. This can be very helpful if you need to file a claim.
Ask About Discounts: Many insurers offer discounts for safety upgrades, like installing smoke detectors, burglar alarms, or deadbolt locks. Be sure to ask what’s available.

Buying a home is exciting, but it can also be stressful. Getting homeowner’s insurance for your new home doesn’t have to be an overwhelming process. By starting early, understanding your options, and asking questions, you can find the right policy that fits both your home and budget.

Unfortunately, too many people try to save on their insurance premiums by skimping on coverage. This may cost you more in the long run if an unfortunate event occurs. Make sure you’re fully covered for your home’s replacement cost. If you’re unsure about any aspect of your policy, ask! At Navisure Insurance Group we know that the insurance industry is complex, and we are here to help you understand your policy fully. Contact us anytime with your questions or concerns.

COREY VANDERMEER | PRESIDENT

Corey started his insurance career in the claims department for a national carrier and learned the basics of insurance coverage and how it’s applied. From there he decided to take the jump into sales and joined an independent insurance agency. Here he learned how to build coverage around the needs of each individual and cater to every client. When Corey decided to start an insurance agency he did so with the intention of simplifying the process of getting insured. With a focus on technology and simplicity; his goal was to create an insurance agency that was different from those currently dominating the market place.

When he’s not working, Corey enjoys golfing, fly fishing and spending time with his wife and kids. Together they enjoy traveling to Northern Michigan and to his wife’s hometown of San Francisco.