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How to buy homeowners insurance

We broke down the homeowners insurance shopping process into six simple steps. When you’re ready to buy, Policygenius can help you compare quotes from multiple top companies.

Pat Howard 1600

By

Pat Howard

Pat Howard

Property and Casualty Insurance Expert

Pat Howard is a senior editor at Policygenius specializing in property and casualty insurance. His work has been featured on Property Casualty 360, Fatherly, MarketWatch, and more.

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Expert reviewed

This article has been reviewed by a licensed Policygenius expert to ensure that sources, statistics, and claims meet our standard for accurate and unbiased advice.

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by

Fabio Faschi, PLCS, SBCS, CLCS

Fabio Faschi, PLCS, SBCS, CLCS

Property & Casualty Insurance Expert

Fabio Faschi is a former property and casualty team lead at Policygenius. His expertise on home & auto insurance has been featured on Forbes, Consumer Affairs, Realtor.com, Apartment Therapy, The Simple Dollar, SFGATE, Bankrate, and Lifehacker.

Updated December 2, 2021|4 min read

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Whether you’re buying homeowners insurance before closing on a new home or re-shopping your existing policy for lower rates, you’ll want to compare policies from several top companies to ensure you’re choosing the right amount of coverage at the best rates.

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How to shop for homeowners insurance 

The best way to shop for homeowners insurance is to compare quotes from at least three insurance companies. That way, you’re able to make an apples-to-apples policy comparison and ensure you aren’t missing out on better or more affordable coverage in your area. 

Our Policygenius agents can help you figure out how much coverage you need and compare quotes from multiple top companies. And when you decide on a carrier, your dedicated Policygenius agent can help you purchase the policy and will even fill out all of the paperwork for you. Talk about a win-win-win.

Six simple steps to buying homeowners insurance

  1. Learn about how much coverage you need

  2. Get familiar with home insurance policy lingo 

  3. Gather information about your home 

  4. Compare home insurance quotes

  5. Choose your policy 

  6. Finalize your policy details

1. Learn about how much coverage you need

When you get home insurance quotes, the coverage amounts listed are often estimates — not an exact calculation of how much coverage you’ll need. To make sure you’re being quoted for the right amount of coverage, consider getting a more accurate estimate of the following:

  • The replacement cost of your home: The amount of insurance on your house should be equal to its replacement cost — the amount it would cost to rebuild the home from the ground up after a disaster. Insurers often provide their own replacement cost estimate using online estimation tools, but for a more precise calculation, consider hiring a professional appraiser.

  • The total value of your personal belongings: You’ll want enough personal property coverage to cover the value of all of your stuff, like appliances, furniture, and electronics. 

  • The total value of all of your assets: You should have enough personal liability coverage to cover your entire net worth in case you’re sued. 

Your homeowners insurance coverage needs will also depend on your home’s location and the risks (wildfires, hurricanes, tornadoes) where you live. If you live in a high-risk coastal area or region that experiences frequent wildfires, your coverage needs will be different than if you lived somewhere with a more mild climate. 

→ Learn about how to calculate homeowners insurance

2. Get familiar with home insurance policy lingo

There are six types of coverages that are in every standard homeowners insurance policy. Understanding how you’re protected by each of the coverage types in a standard policy will be useful when comparing policies. 

  • Dwelling: Covers physical damage to the structure of your home and any attached structures, like a garage or porch 

  • Other structures: Covers physical damage to structures on your property that aren’t attached to the home itself, like a detached garage, guest house, or fencing around your property 

  • Personal property: Covers damage or theft of personal belongings that you own, including furniture, clothes, jewelry, and electronics 

  • Additional living expenses (ALE): If your home is severely damaged or destroyed by a covered loss, ALE can cover the cost of temporary lodging and relocation expenses while your house is being repaired or rebuilt 

  • Personal liability: Covers you and your assets from expensive lawsuits if you’re ever held liable for someone else’s injury or property damage 

  • Medical payments: Covers guests’ medical expenses if they’re injured on your property

You’ll also have to choose between three levels of coverage:

  • Actual cash value: The cheapest option, actual cash value reimburses you for the value of your property minus the cost of depreciation, or wear and tear. This leaves you paying more out of pocket when you file a claim. 

  • Replacement cost value:  Most insurers allow you to upgrade to replacement cost value coverage, which reimburses you for the value of your property at today’s prices. This provides larger reimbursements when you file a claim.   

  • Extended replacement cost value: Another optional upgrade, extended replacement cost value coverage reimburses you for the cost to rebuild your home — even if it’s more than your policy limit. This protects you from construction material and labor costs that tend to skyrocket after a natural disaster.

→ Learn more about the different types of home insurance coverages

Flooding and earthquakes aren’t covered under standard home insurance policies

Insurance companies will only accept claims if the cause of damage or property loss is a covered peril in your policy. Examples of covered perils include fire, wind damage, theft, burst pipes, fallen trees, and more. Disasters that are not covered include flooding, earthquakes, and landslides.

3. Gather information about your home

To get an accurate quote estimate, you’ll need to give the insurer information about yourself and the house you’re insuring. Here’s some of what you’ll need to provide when you shop homeowners insurance policies.

  • Your home’s square footage and roof type (like hip or gable)

  • The heating type of your home’s appliances (gas or electric)

  • The renovation history of your home

  • Whether you have any pets, trampolines, or a pool

The more details you give about your home, 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. Otherwise, you can find your home’s structural details by searching for your property on your county’s property appraiser website. 

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4. Compare home insurance quotes

The easiest way to buy homeowners insurance is through a marketplace like Policygenius where you can compare quotes across multiple companies in your area. Once you apply, a licensed expert will reach out with policy recommendations that match your coverage needs and budget. They’ll also nail down any home insurance discounts you qualify for. 

We recommend paying close attention to quotes from any insurance companies you already have a relationship with, as they often offer lower rates for existing customers. So if you already have an auto or umbrella insurance policy with a specific carrier, you may get a bundling discount for signing up for home insurance with that same insurer.

Apart from the policy itself, you’ll also want to look into the insurance company’s background. Check to see if the company insuring your house is financially stable, read reviews, and check ratings with third-party sites like AM Best, J.D. Power, and Consumer Reports.

Don’t just go with the cheapest quote — do your research first

When deciding on home insurance, don’t automatically go with the cheapest quote — you should also consider the company’s track record with customer service and paying out claims. Policygenius has comprehensive reviews of over 20 home insurance companies, including claim satisfaction rankings from companies like J.D. Power and Consumer Reports.

5. Choose your policy 

Once you’ve compared quotes, it’s time to select a policy and customize it to suit your coverage needs.

If you have a mortgage, ask your loan officer if the coverage in your policy meets the lender’s insurance requirements. Homeowners insurance doesn’t cover water damage caused by flooding, for example, so you may need to get separate flood insurance if you live in a high-risk flood zone. 

There are also several optional home insurance endorsements that can be added to your policy for an additional cost. Some of the most common endorsements are:

  • Water backup coverage 

  • Appliance breakdown coverage

  • Service line coverage

  • Scheduled personal property coverage

  • Extended replacement cost  

  • Guaranteed replacement cost

  • Flood coverage

  • Earthquake coverage

→ Learn more about homeowners insurance endorsements 

6. Finalize your policy details

You’ve compared quotes, gotten all your most pressing questions answered, selected a policy, and finalized your coverages. Now it’s time to finalize a few policy details.

  • Choose a deductible. You’ll need to set your policy’s deductible, which is the amount you’re responsible for covering on each claim before your insurance will pay out. A higher deductible means a lower premium, and a lower deductible means higher premiums. 

  • Determine how your premiums are paid. It's common practice for lenders to require that premiums for the year be paid in full ahead of closing on your mortgage. If insurance and property taxes are paid through an escrow account set up by your lender, this payment will likely be part of your mortgage closing costs. 

  • Set your policy dates. Lastly, you’ll choose your policy period, which is when your home insurance starts and ends. If you’re switching homeowners insurance providers, a Policygenius agent can cancel your old policy, set an effective date for your new one, and inform your loan officer of the switch. 

Once your billing and policy details are set and your lender approves of the policy, you’re good to sign on the dotted line, pay your first premium, and activate your homeowners insurance.

4 mistakes to avoid when buying homeowners insurance

When shopping for homeowners insurance, here are a few common pitfalls to avoid:

  • Focusing on costs rather than coverage levels. Keep in mind that the cheaper your policy, the more you’ll have to pay out of pocket if you file a claim.

  • Not understanding what is and isn’t covered in your policy. Read through your policy to make sure you’re properly covered in the event of a wildfire, hurricane, earthquake, or flooding. Most insurance companies require additional coverage endorsements for damage caused by natural disasters.

  • Skimping on personal property damage coverage. Make sure to include items like heating and cooling systems, appliances, home office equipment, and fine jewelry when tallying your personal property coverage limits. 

  • Forgetting to re-shop your policy each year. Many insurers raise rates each year due to inflation and changes to the value of your home. Policygenius can help you re-shop your policy each year to make sure you’re still getting the most bang for your buck.

How do home insurance companies determine your premium?

Your home insurance premium is directly tied to your likelihood of filing a claim. That’s why the age of your home and location play a pivotal role in how much you pay each month. For example, you’re more likely to file a claim if your home is older or you live in an area prone to flooding, which typically equals higher rates.

Here are a few other factors insurance companies consider when deciding your premium:

  • Claims history. If you have multiple insurance claims on your record in the past five years, insurers will think you’re more likely to file a claim, which spells higher rates.

  • Home’s building materials. Your home’s building construction, roof type, heating type, and the condition of your home all play a role in your insurance premiums.

  • Neighborhood crime rate. If you live in an area prone to break-ins or vandalism, you’ll see higher rates to match that higher risk.

  • Owning a pool, trampoline, or dogs. Most insurance companies charge higher premiums if you have a pool, trampoline, or even certain dog breeds since your home poses a greater risk of accidents happening.

Frequently asked questions

How soon before closing should I get homeowners insurance?

To be on the safe side, start shopping for homeowners insurance around three weeks to a month ahead of your closing date. Most mortgage lenders will require proof of homeowners insurance at least three business days prior to closing on the home, and it’s not unusual for lenders to require this documentation as early as 15 days prior to closing.

What happens if I don’t have home insurance?

If you don’t have homeowners insurance and your house suffers storm damage or is burglarized, you’ll have to pay for repairs or new personal belongings out of your own pocket. If a visitor is injured on your property and files a lawsuit, you’ll have to cover the cost of medical and legal expenses out of your own pocket. Most mortgage lenders require homeowners insurance, so if you have a mortgage on your home and you don’t purchase a policy, your lender will likely purchase one on your behalf.

Do I need home insurance if I don’t have a mortgage?

Homeowners insurance isn’t required by law, so if you don’t have a mortgage on your home, you don’t need to purchase homeowners insurance. However, it’s a good idea to make sure you’re covered regardless. A typical policy protects you financially if your home is badly damaged in a disaster or you’re held liable for an accident. If you’re concerned about the cost, consider increasing your policy deductible for a lower rate.

How much is home insurance a month?

Homeowners insurance costs around $104 a month or $1,249 annually, according to the National Association of Insurance Commissioners. But in some states, homeowners insurance costs as little as $800 a year.

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