How to Buy Homeowners Insurance?

As your home is possibly the largest asset that you will ever own, adequate insurance coverage is necessary.


Published on December 17, 2020

Buying homeowners insurance doesn’t have to be complicated. Whether you’re looking to insure a newly purchased home or you’re shopping for a better policy or lower rates, the process to buy homeowners insurance is similar.

Step #1: Gather Your Information

Get all your personal details ready, including the list of people living in the house being insured.

You will need to have the exact address of the property. If you’re buying new insurance for the same home, you will need the prior insurance policy, which documents important information such as the age of the house, square footage, roofing, plumbing and electrical specs… You might want to have previous insurance inspection reports ready as well.

Check your mortgage lender requirements: additional coverage might be required.

Finally, be prepared to answer questions about potential liability issues: your insurance will want to know if you have a trampoline or a pool, for example.

Step #2: Home Inspection Report

If you are just beginning to buy a home, the home inspection is something that you or the seller pays for. A third-party company comes to look at the house and point out any issues they find with the structure, integrity, etc. Sometimes the inspector finds very minor problems like a chipped door. Other times, it comes to a buyer’s attention that their entire roof needs to be replaced, or there is another major problem.

If you already own the house, you might have some prior insurance inspection reports that you can use. In any case, it is critical to fully understand the condition of your home, including any issues. Any areas you were aware of or did not come from a spontaneous loss will not be covered under your insurance.

Step #3: Understand Your Coverage Needs

After you have all your information gathered, which may or may not include the inspection, it is time to calculate your homeowner’s insurance needs

The estimated replacement cost of your house is always based on the projected cost to rebuild your home, so there is very little room for personalization.

Where you need to further consider your own needs is liability coverage, which comes into play if someone were to be hurt on your property and sue you. Liability should typically cover all of your financial assets, including the market value of your home. Let’s say your house is valued at $250,000 and you have other financial assets of $55,000. In that case, your liability amount should be a minimum of $300,000. Most homeowners are recommended to have at least $500,000 liability.

When you buy homeowners insurance, it is not only to protect your home and belongings, but also to protect all your assets in case of accident on your property.

Step #4: Compare Quotes and Choose an Insurance Policy ​

After you have determined your liability needs and calculated your estimated replacement cost, it is time to make your purchase.

Research insurances online and compare quotes. Look beyond the price: what are the various coverage options? Do you want an app for all your insurance needs or would you rather interact with an agent? Are there any bundles or savings possibilities? What if you’re a first-time buyer and need extra help? Whatever your requirements, there’s a top-rated home insurance company that is right for you.

Sometimes, people buy homeowners insurance directly through their mortgage. This is not required, but it is very automated and user-friendly. Other people pay every year. It is entirely up to you.

Often, insurance companies will decide that a property like yours needs an additional inspection from them.

Step #5: Final Inspection

Like your initial inspection, there is little to do on your part. The insurance company’s inspector will pay you a visit to ensure that all the details on the application are correct and you are being adequately insured.

If you are selected for a final inspection, know that it is not because there is something wrong with your house. It is simply a way for individual companies to make sure they do not take on high risks. A lot like you do when you buy an insurance policy.

While the inspector is on your premise, you can ask as many questions as you’d like and they may be able to recommend a few improvements that will get you a discount on your homeowners insurance premiums.


Talk to Your Agent

If you have more questions about how to buy homeowners insurance, reach out to your agent for more information.