Home Insurance 101: What Every Homebuyer Should Know

Buying a home is more than just finding the perfect place to live, it’s one of the biggest financial decisions you’ll ever make. And just like any investment, it’s important to protect it. That’s where home insurance comes in.

If you’re getting a mortgage, your lender will likely require it. But even if it’s not required, having home insurance gives you peace of mind and a financial safety net if something unexpected happens.

What Is Home Insurance—and Why Do You Need It?

Home insurance helps cover the cost of repairing or rebuilding your home if it’s damaged by things like fire, storms, or vandalism. It can also cover your belongings, pay for a place to stay if your home is unlivable after damage, and even help with legal costs if someone gets hurt on your property.

Here’s what a typical home insurance policy covers:

• Your home’s structure: Covers damage to your home and any detached buildings like garages or sheds.
• Your stuff: Replaces or repairs furniture, appliances, and personal items damaged or stolen.
• Liability protection: Helps pay legal or medical bills if someone gets hurt on your property.
• Living expenses: Pays for temporary housing if you can’t stay in your home during repairs.

What’s Usually Covered?

Most home insurance policies help cover things like:

• Fires and smoke damage
• Storms, wind, and hail
• Theft or vandalism
• Explosions
• Vehicles hitting your home
• Falling objects
• Civil unrest

Keep in mind: Every policy is different. It’s important to read the fine print and understand what’s not covered—like flood damage, earthquakes, or normal wear and tear. You may need to add extra coverage for certain risks.

What Will It Cost?

Home insurance premiums vary. The price depends on things like:

• Where the home is located
• The value of the home and your belongings
• How much coverage you want
• Local risks, like flooding or hurricanes

Getting a quote before you buy a home can help you plan your budget and avoid surprises. Need Help Navigating It All? Insurance can be confusing but you don’t have to figure it out alone.

How to Insure Your New Home: What Every Buyer Should Know
Buying a home is a huge milestone—but protecting that investment is just as important. That’s where home insurance comes in. It’s not always simple, and it’s not always cheap, but it’s a must-have for almost every homeowner, especially if you’re financing your purchase with a mortgage.

In fact, according to Forbes, the average home insurance policy now costs around $1,951 per year for a $350,000 home—up 16% from last year. So how do you make sure you’re getting the right coverage at a fair price?

Here are the key steps to help you feel confident in your insurance choice:

1. Shop Around for the Best Fit

Not all insurance companies offer the same coverage, service, or price. Take time to compare several options:

• Request quotes from at least 3 providers.
• Check online reviews and your state’s Department of Insurance for complaints or claims history.
• Make sure the company is financially stable—this matters when it’s time to file a claim.

Tip: Independent insurance agents often work with multiple companies and can help compare offers for you.

2. Understand What the Policy Covers

Policies can differ widely. Be sure to understand:

• Dwelling Coverage – Does it cover the full cost to rebuild your home?
• Personal Property – Are your belongings covered for theft, fire, and other risks?
• Liability Protection – What happens if someone is injured on your property?
• Flood Insurance – Standard policies usually don’t cover flooding; this may be an extra policy.

3. Know What Affects Your Premium

Your rate depends on several factors, including:

• The size, age, and materials of your home
• Location (proximity to fire services, crime rates, weather risks)
• Risk features like fireplaces, pools, or trampolines
• Your credit score and claim history

These details can have a big impact—so it’s worth asking your agent how each factor plays into your quote.

4. Ask the Right Questions

Before you buy a policy, ask:

• What’s the deductible?
• Are there any exclusions?
• Will this policy meet my mortgage lender’s requirements?
• Is bundling with auto or other policies an option for discounts?

The Bottom Line

Home insurance is about peace of mind. It protects not just your house, but the life you’re building inside it. Taking time to understand your options can help you make smart, confident decisions—and avoid surprises down the road.

Need a referral or have questions? We’re here to help connect you with trusted local insurance professionals.

#MakingHomeHappen

7 Insurance Questions Your Buyers Need to Ask Before They Sign a Contract

Real estate agents often receive dozens of questions about homes long before buyers decide to invest. They may want to know about local schools. Some ask about the area’s resale value or want to know the type of tile in the basement bathroom.

These are all good and important questions, but those related to home insurance are even more critical. Home insurance is a vital investment for home buyers. Property owners never think their homes will catch fire or their sweet pups will bite a visitor. Yet, data from the Insurance Information Institute shows that 5.3% of all homes in the U.S. saw a claim.

How can you help? Educate your home buyers about home insurance as much as possible (we have a virtual hangout planned to give you the home insurance 101 you need). Then, before your buyers purchase insurance, encourage them to ask the following questions.

Before signing a home insurance contract, buyers need to know the answers to these questions:

1. How Much Coverage Is This Quote For?

Know the exact value of the coverage provided, such as $300,000 or $800,000. This should accurately represent the cost to rebuild the home and meet the lender’s requirements.

2. What Are the Exclusions on the Policy?

Exclusions are those types of incidents (perils) not covered by the policy. Common exclusions include:

• Flooding, unless a separate flood insurance policy is purchased
• Wear and tear associated with aging
• War
• Earth movement, including earthquakes
• Nuclear and radiation accidents
• Neglect
• Mold
• Government action
• Intentional damage caused by someone in the home
• Rodent, termite, and pest damage

3. Do I Need Separate Flood Insurance?

Most home insurance for properties within FEMA flood zones does not automatically include protection. As an agent, you know the importance of flood zone disclosures and previous local flooding concerns. Buyers can use FEMA Flood Maps to help them know if their properties are in a high-risk zone and warrant coverage.

4. What Is the Value of the Content Coverage?

Contents coverage provides financial protection for damaged personal property within the home. In the ideal situation, insurance should cover the true value of those assets either as replacement coverage or actual value. However, many people underestimate the value of their personal property.

5. What Is the Deductible on the Policy?

The deductible is the portion of any claim that the property owner must pay before the insurance company kicks in. Homeowners with a higher deductible tend to have lower premiums, but they need more money on hand to meet their emergency needs.

6. Are All Structures Covered?

It’s also critical for property owners to have a clear understanding of what’s covered on their properties. Homes with detached structures, such as outbuildings or garages, may need to have those structures mentioned explicitly in their insurance policies.

7. What Additional Home Insurance Amendments Do I Need?

Property owners with highly valuable assets, such as rare collections or expensive electronics, may wish to purchase additional coverage for those assets. This process involves adding endorsement to the policy, which will specifically list the inclusions covered. Coverage for those items can also be critical if you live in a high-risk area for flooding, wildfires, hurricane damage, or earthquakes.

Overwhelmed? Remember that you’re not a home insurance agent and you don’t know all the details about coverage. We are here to help you connect with the right insurance provider for your needs.