First-Time Homebuyer? Your Insurance Checklist Before Closing

Congratulations on buying your first home. Before you get to closing day, you need homeowners insurance in place. Your mortgage lender requires it, but more importantly, it protects the biggest investment you've ever made. Here's exactly what you need to know.

When to Start Shopping for Homeowners Insurance

Start shopping as soon as your offer is accepted, ideally 30 days before closing. This gives you time to compare quotes, ask questions, and avoid last-minute scrambling. Your lender will need proof of insurance before they'll finalize your loan.

How Much Coverage Do You Need?

Your policy needs to cover the full replacement cost of your home, not the purchase price and not the market value. Replacement cost is what it would take to rebuild your home from the ground up at today's construction costs. Your insurance agent can help you calculate this number accurately.

What to Look for in a Policy

Make sure your policy includes dwelling coverage (the structure itself), personal property coverage (your belongings), liability coverage (protection if someone is injured on your property), and additional living expenses (temporary housing if your home is uninhabitable). Also check for any exclusions specific to your area, like flood or earthquake.

Do You Need Flood Insurance?

Standard homeowners insurance does not cover flood damage. If your home is in a flood zone, your lender will require a separate flood policy. Even if you're not in a designated flood zone, it's worth considering. Over 25% of flood claims come from properties outside high-risk areas.

The Closing Day Checklist

Before closing, confirm your policy effective date matches your closing date, verify your lender is listed as the mortgagee, make sure your coverage amounts meet your lender's requirements, and keep a copy of your declarations page handy. Your agent should handle most of this, but it's good to double-check.