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A complete guide to buying homeowners insurance.
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byFabio Faschi, PLCS, SBCS, CLCS
Fabio Faschi, PLCS, SBCS, CLCS
Operations Lead, Property & Casualty
Updated January 22, 2021|3 min read
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Your home is arguably your most valuable asset, which is why it’s so important that you protect it with the right homeowners insurance coverage. Whether you’re buying homeowners insurance before closing on a home or re-shopping your current policy for lower rates, you’ll want to compare policies from several of the industry’s top companies to ensure you’re not overpaying for coverage or under protecting your house.
If you’re shopping for homeowners insurance for the first time, be sure to familiarize yourself with the different coverage types and policy lingo
Consider comparing quotes from multiple insurance companies to ensure you’re getting the right coverage at the lowest rates
For an accurate quote comparison, make sure the coverage levels for which you’re being quoted, like your home’s rebuild cost, are accurate
The best way to compare policies is to shop through an independent company like Policygenius
To better prepare yourself for the homeowners insurance shopping experience, be sure to do the following:
Familiarize yourself with the basics of homeowners insurance
Gather information about the house, like its replacement cost, style of build, and other characteristics like the roof age and type of heating system
Apply for coverage through an independent marketplace like Policygenius, compare coverage and rates from multiple companies, and select a policy
Check your eligibility for any available policy credits and discounts
Choose a billing plan and sign
Ready to shop home insurance?
Before you begin shopping for your homeowners insurance policy, you should have a general idea of how much coverage you need to ensure your home and personal possessions are fully covered. You’ll also want enough liability coverage to withstand a potentially expensive lawsuit.
The following components are in every standard homeowners insurance policy. Having an idea of how much coverage you need for each policy provision will make you a more prepared shopper.
Dwelling coverage - Your dwelling coverage limit should be equal to your home’s replacement cost, or how much it would cost you to rebuild the home in the event it was destroyed. Insurance companies will propose a home replacement cost for you during the quoting process, based on information like its square footage, number of bathrooms, and local rebuild costs. For a more accurate estimate, consider getting a proper replacement cost appraisal of your home
Personal property coverage - Personal property coverage limit is typically set as a percentage of your dwelling coverage limit (typically 50% or 75%). To enhance your claim payouts and increase coverage limits on expensive valuables with strict coverage limitations, consider replacement cost contents coverage or scheduled personal property coverage
Additional living expenses - If you live in an area that experiences frequent natural disasters, consider adding more loss of use coverage to your policy to cover relocation expenses if you’re displaced from your home. Loss of use coverage is typically 20% of your dwelling coverage limit, but it may be possible to increase your coverage limits
Liability coverage - Liability coverage protects you from expensive lawsuits in the event you’re legally responsible for someone else’s injury or property damage. Insurers generally offer anywhere from $100,000–500,000 in protection. To determine how much coverage you need, add up the value of all of your assets, including your home, vehicles, investments, future wages, and personal belongings
Medical payments coverage - Medical payments coverage is no-fault coverage for guests’ medical expenses if they’re injured on your property. Medical payments coverage is generally anywhere from $1,000 to $5,000
Read about to how calculate homeowners insurance.
The best way to shop for any type of insurance — be it homeowners or life insurance — is to go through an independent agent or broker so that you’re comparing policies across multiple companies. Independent agents don’t work for an insurance company, so they can give you unbiased advice about which policy is best for you.
If you have an existing policy that you need to cancel or need your new policy added to your mortgage, our licensed agents here at Policygenius will provide you with the expertise, unbiased coverage recommendations and help get you signed up for a policy that's effective and affordable for you and your home.
The more details you have about the home, like the interior specs, the more accurate your quote will be. If you’re simply swapping out policies, most of this information will be available on your old policy.
Here’s a rundown of the information you may need to provide to your agent or broker in order for them to produce accurate quote estimates when you apply.
Address of your home - The address of the property being insured
Insurance appraisal - To determine the full rebuild value of the home if it's damaged or destroyed. This can be done by referencing a recent home insurance policy, hiring an appraiser, or hiring roofing companies, contractors, and builders to assess value to individual parts of your home
Prior insurance inspection reports - Inspection notes from previous insurers can be helpful in determining a multitude of coverage considerations; if they noted that your plumbing is old and requires water backup coverage, your next insurer may take note of that and quote you on the additional coverage
Prior insurance - If you’re buying insurance for the same home you’ve lived in under previous policies, simply provide the broker or agent with your prior insurance policy so they can fetch information like: homes square footage, heating type, age of your roof, plumbing specs, electrical specs and distance from fire departments
Lender requirements - Let your broker know if your mortgage lender requires any additional levels of coverage like flood insurance
You’ll also need to list who will be living in the insured home, whether you’ll be renting the home out or not and if you consider the home a primary or secondary residence. For example, if you’re renting it out or use the residence as a home office, your insurance broker may offer suggestions to maximize your home insurance tax deductions that are available for rental or home office properties.
Date of birth - This can help an agent or broker access your insurance history
Occupation - Depending on your occupation, you may be eligible for certain discounts or group rates
Social Security number - To access your credit history which better informs the rates you’ll be paying.
Property history - If you haven’t lived at the home you’re seeking coverage for at least two years, you’ll be asked to provide addresses for previous residences
Liability questions - Carriers will want to know if you have any pets, trampolines, tree forts, or pools (and whether the pool is above-ground or in-ground, specifically)
After you’ve given your agent all the required information about your home, it’s time to get quotes and select a home insurance policy. Make sure to analyze a variety of policy options so you’re able to do a proper comparison, don’t automatically choose the cheapest policy without checking to make sure it’s got the coverage you need.
Apart from the policy itself, you’ll also want to look into the insurance company’s background. Be sure they’re a financially stable company, read reviews and check their ratings with third-parties like A.M. Best, J.D. Power, and Consumer Reports, to name a few.
You’ve compared quotes, gotten all your most pressing questions answered and selected a policy, now it’s time to choose a billing plan and policy deductible.
If you’re buying a home and need homeowners insurance to close on the property, there are a few details you need to finalize first:
Premiums - It's common practice for lenders to require that premiums for the year be paid in full ahead of closing on your mortgage. Be sure to clarify with your agent if this is the case — the agent will be in contact with your lender about coverage and billing requirements for how your insurance will be paid moving forward.
Deductible - You’ll also need to set your policy’s deductible, which is the amount you pay before your claim for damages is covered. From a cost standpoint, what you’re looking for is a low monthly or annual premium. So if you don’t plan on filing many claims, choose the higher deductible.
Effective date - Lastly, you set the policy’s effective date, which is when your coverage begins.
Once your billing and policy dates are set and your lender approves the policy, you’re good to sign on the dotted line.
Your home insurance carrier will typically perform an inspection of the property to make sure everything is in order and reported as quoted. If anything is off or you forgot to mention something in your application, your adjuster will take note of the errors and omissions and you’ll see it reflected — for better or worse — in your next bill.
For example, maybe your roof is about 10 years older than you stated on your application; or on the flip side, maybe you forgot to mention that your home has certain protective features like a security system or stormproof windows that could lower your rates.
It can take anywhere from minutes to a few days to buy a homeowners insurance policy. Your homeowners application can take a couple days to process, and your insurer might require a home inspection.