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How to get insurance for your first home

Get the coverage you need for the home of your dreams.

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The right home insurance policy protects you and your new home from the financial impact of fires, storms, theft and any other reasonable risk that you might face. Since you’ll have multiple coverage options to choose from, understand what’s covered by each and how to get your policy started before closing day.

Do I need home insurance?

You aren’t legally required to have home insurance, but if you have a mortgage, your lender may require it. Regardless of whether or not you’re obligated to insure your home, you should.

Your home is likely the most valuable asset you own, together with all your valuables and possessions safeguarded inside it. The right insurance policy can offer the protection you need to rebuild your home, buy new furnishings and get your life back on track after a disaster.

What does home insurance cover?

The two most important parts of your policy are your dwelling and personal property coverage, although home insurance includes several different coverage types.

Dwelling coverage

This covers the structure of your home against loss or damage caused by a covered event. You’ll have two types of dwelling coverage to choose from:

  • Replacement cost will cover the costs required to restore your home to its state before the covered damage happened. This comprehensive coverage costs more than covering your home at its market value.
  • Market value. This type of policy pays the current market value of your home if it’s destroyed. It costs less to insure but also offers less coverage. For example, if you insure a home for $200,000 but find that it costs $250,000 to rebuild after a fire, your insurance company won’t pay beyond your coverage limits.

Personal property coverage

This covers the cost of repairing or replacing your belongings if they’re stolen or damaged due to a covered event. When choosing a policy, you’ll have two types of personal property coverage to choose from:

  • Replacement cost. This type of policy covers the cost of replacing your stolen or damaged belongings with new, equivalent items. For example, if your three-year-old laptop was destroyed in a fire, your insurer would pay out the current cost of a new laptop with similar specifications. This is the most comprehensive coverage, but also the most expensive.
  • Actual cash value. This type of policy covers your belongings up to their current market value, factoring in depreciation. For example, if your three-year-old laptop was destroyed in a fire, your insurer would pay out the current going rate for a three-year-old used laptop with similar specifications.

Different kinds of home insurance to consider

The type of insurance you need is slightly different if one of these situations applies to you:

  • Mobile home policies. Insurance offers similar coverage for this type of home as for a standard structure, but you’ll need a policy designed for mobile or manufactured homes.
  • Tiny home insurance. Your tiny home may need custom mobile home insurance if it’s set on a foundation, or an RV policy if it’s built on wheels and moved from place to place.
  • Home under construction. If you’re building a new home or making major renovations, you may need an owner builder’s risk policy, otherwise known as a home under construction policy. In many cases, the builder will provide plenty of insurance for the contractors’ liability and any home damage, but it’s good to understand what situations are covered. Then, ask about any additional construction coverage you may need when talking to the home insurance company you’re planning to use.

Can I get home buyer insurance to cover the buying process?

No, you probably won’t find homeowners insurance that covers your financial risks during the home-buying process. If you suddenly lose your job or the seller backs out, you might not recoup all the costs for home inspections. So you’ll need to factor in these risks when deciding to buy a home.

However, you can reasonably expect to get your earnest money returned if the seller backs out of a binding contract. A home or renters policy won’t cover the lost money if you can’t recover this cost, though.

What is a covered event?

The types of damage covered depends on your insurance policy. Both HO-1 and HO-2 policies are known-peril policies, which means that you’re covered for the specific damage named in your policy. If your home or belongings are damaged from an incident not named in your policy, it won’t be covered.

HO-3 policies are the most comprehensive, open-peril policies. This means that your HO-3 policy would cover everything except exclusions listed in the policy. When you’re comparing policies, talk with the insurance company if you’re not sure whether something is covered.

Our top pick: Policygenius home insurance

This online marketplace does most of the work for you, matching you with quotes from 14 highly rated home insurers.

  • Compare 14 providers in one place
  • Get advice from an insurance expert, not a sales rep
  • Easy to switch with hands-on help

How much home insurance do I need?

The amount of coverage you need depends on your home’s cost to repair or replace based on the current market.

Likewise, protecting your belongings depends on what you own and each item’s value. You can inventory your belongings room by room, writing down the value of your furniture, electronics and appliances. Home inventory apps like Sortly and Magic Home Inventory can make the process easier than creating a list from scratch.

If you need additional coverage for jewelry or other expensive items, talk with your insurance company about valuable personal property insurance, also known as scheduled personal property insurance.

How do I buy home insurance?

The most common way to buy home insurance is to compare companies online and purchase directly from the insurer. However, you can buy coverage over the phone or even in person if your chosen insurer has office locations.

When should I buy home insurance?

Most mortgage lenders will require you to purchase home insurance before you sign the final mortgage paperwork and close on the house.

How much does home insurance cost?

The average cost of homeowners insurance is around $1,200 per year, according to the Insurance Information Institute. Averages range from $700 in Idaho to nearly $2,000 in Florida.

You could end up paying significantly more or less, depending on:

  • Where you live. Is your area prone to crime rate or extreme weather? If so, this will increase your premiums.
  • The value of your policy. A more expensive home will cost more to insure than one with a standard home value for your area. Choosing a high coverage limit will also raise your premiums.
  • Your deductible. By choosing a higher deductible you’ll pay lower premiums, and vice versa.
  • Your home’s construction. The age of your home and the materials used in its construction can affect your home insurance premium. For example, homes with impact-resistant roofing can cost less to insure than ones with standard roofing construction.
  • Additional options. If you want to add optional coverage to your policy for jewelry or bringing the home up to code, you’ll pay a higher premium.
  • Your claims history. If you’ve made home insurance claims before, this can impact your future premiums.

How can I save money on home insurance?

To get the best deal on your policy:

  • Buy online. Many companies offer online discounts.
  • Choose a higher deductible. Agreeing to a higher deductible can save on premiums, but it’ll mean paying more out of pocket after a covered event.
  • Install a security system. A monitored security system can lower your risk of theft and your insurance premiums.
  • Look for discounts. Some companies offer discounted coverage to long-time customers, customers with multiple insurance policies or homeowners over a certain age.
  • Shop around. Find the best deal on home insurance with several quotes from insurance companies.

Compare home insurers for first-time homebuyers

Name Product Storm & water backup Valuable property Enhanced rebuild Homeshare coverage Available states
Policygenius home insurance
All 50 states
This online marketplace does most of the work for you, matching you with quotes from 14 highly rated home insurers.
Kin home insurance
AL, CA, FL, GA, TX
Get coverage fast with policies designed to protect coastal homes.
Progressive home insurance
All 50 states
Protect your home and auto insurance with Progressive to save a bundle.
Allstate home insurance
All 50 states
Protect your home and belongings and save even more by bundling insurance with Allstate.
Liberty Mutual home insurance
All 50 states
Invest in affordable insurance that protects your home and your property from damage no matter where you live.
Gabi home insurance
Gabi home insurance
All 50 states
Get free quotes from top insurers for the exact coverage you need in minutes.
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Compare up to 4 providers

Bottom line

Home insurance is an essential expense for every new homeowner, but it doesn’t have to break the bank. By comparing home insurers and taking advantage of discounts, you can get the coverage your new home needs at an affordable price.

Frequently asked questions about insuring your first home

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