Buying a home comes with plenty of moving pieces, and homeowners insurance is an important one to address early. We asked Chris Walton, our Agency Manager at Cornerstone Insurance Agency, to answer some of the most common questions homebuyers have about insurance before closing.
Check out our guide below for proactive steps to take to protect your home.
Questions? Reach out to one of our knowledgeable insurance agents. We’re eager to set you up with the right coverage and rate!
When should homebuyers start thinking about homeowners insurance?
Chris: Ideally, homebuyers should start thinking about insurance as soon as they are under contract. Waiting until the last minute can leave buyers scrambling to secure coverage and may create challenges during the loan process.
Starting early also gives you time to compare coverage options, identify available discounts, and make sure the policy provides the protection you need before closing.
What information does an insurance agent need to provide a quote for a newly built home?
Chris: For a newly constructed home, an insurance agent will typically need information such as:
- Square footage
- Construction type and exterior materials
- Roof type and materials
- Number of stories
- Foundation type
- Distance to the nearest fire hydrant
- Builder information
- Estimated closing date
A builder spec sheet can also be helpful because it may include many of these details, along with safety features such as interior sprinklers or monitored alarm systems. Having this information available can help streamline the quoting process.
Is insuring a newly constructed home different from insuring an older home?
Chris: It can be. New homes may qualify for more favorable rates because they are built with newer materials and current building codes, which can reduce certain risks.
There may also be less uncertainty about the home’s condition compared with an older property, where insurers may need to consider the age of systems, previous updates and whether those updates were permitted. New homes may also come with builder warranties that can help address certain defects.
What factors can affect the cost of homeowners insurance?
Chris: Location is one of the biggest factors. Insurance costs can be influenced by risks in the area, including wildfire, hail, wind, and flooding. Proximity to rivers, streams, and other areas with elevated flood risk can also be considered.
The coverage and endorsements you choose can also affect your premium.
Why shouldn’t homebuyers focus only on insurance premiums?
Chris: The lowest premium does not necessarily mean the best protection. A policy with lower limits or fewer coverages could leave you underinsured if your home experiences significant damage or a total loss.
For example, if rebuilding costs increase after a major event, a policy without sufficient replacement-cost protection may not cover the full cost to rebuild, leaving the homeowner responsible for the difference.
When comparing policies, consider the balance between cost and the coverage you’re receiving, not just the premium.
What insurance coverage or endorsements should new homeowners consider?
Chris: Depending on the home and the homeowners needs, there are several additional coverages worth discussing with an insurance agent, including:
- Extended or guaranteed replacement cost: Can provide additional protection if the cost to rebuild exceeds the home’s initial dwelling coverage amount.
- Water backup and sump pump overflow: Can provide protection against certain types of water damage.
- Service line coverage: Can help cover certain utility service lines running between the home and the street.
- Coverage for valuable items: Homeowners with jewelry, artwork or other high-value possessions should discuss whether additional coverage is appropriate.
- Flood insurance: Homeowners should ask about flood insurance even if they don’t live in an area, they consider high risk. Flood coverage is generally separate from a standard homeowners policy.
Can the builder help with the insurance process?
Chris: Yes. A builder can provide a spec sheet containing information such as the home’s square footage, construction materials, roof type and safety features.
Having this information readily available can help an insurance agent prepare a quote more efficiently. A proactive builder’s partner may provide these details directly rather than requiring the buyer to track them down.
What are some common insurance misconceptions among first-time homebuyers?
Chris: One common misconception is that flood damage is automatically covered by a standard homeowners policy. Flood insurance is generally a separate policy, so buyers should ask about their flood risk and coverage options.
Another misconception is that the home’s purchase price should equal its insurance coverage amount. These figures serve different purposes. The purchase price reflects factors such as the home’s location and other market considerations, while dwelling coverage is intended to account for the cost to rebuild the home’s structure.
What should homeowners do if their insurance premium increases significantly after the first year?
Chris: Start by contacting your insurance agent to understand why the premium changed. Factors could include broader rate changes, claims history or other changes affecting the policy.
Rather than simply looking for the cheapest policy, use the opportunity to conduct a coverage review. An agent may be able to identify potential savings while maintaining the coverage you need.
What is the most important insurance advice for a homebuyer before closing?
Chris: Don’t simply accept the first quote.
Starting the insurance process early gives you time to sit down with an agent, review what the policy covers, and make sure the dwelling coverage reflects the estimated cost to rebuild the home, not simply the purchase price.
It’s also important to understand any additional endorsements included in the policy and how they can help protect you. The goal isn’t just to find a policy that meets the requirements for closing; it’s to make sure you have the right protection for your home and your needs.
Have questions about homeowners insurance?
Our insurance agents are here to help. If you’re buying a home and want to better understand your coverage options, reach out to a Cornerstone Insurance Agency agent. We can help you navigate your options, answer your questions, and find coverage that fits your home and your needs.
Call Cornerstone Insurance Agency today to speak with one of our insurance agents.
This article is for informational purposes only. You should not act based on this information without first consulting with your insurance agent; if you would like a quote from a Cornerstone Insurance Agency licensed agent, contact us. We disclaim all liability for actions taken or not taken by you based on the contents of this article which is provided “as is.” Cornerstone makes no representation that this content is error-free.