Skip to main content
Home » First-Time Homebuyers » A First-Time Homebuyer’s Guide to Insurance

Buying your first home is exciting! Make sure to protect your investment by purchasing the right home insurance.

New homeowners have a lot to be excited about, but there are many steps to ensure the home-buying process goes smoothly. Selecting the right insurance is one of those steps. Here are some important things to consider. 

A standard homeowners insurance policy typically covers:

  • The structure of your home itself (also known as Coverage A).
  • Other structures on your property, such as a detached garage, shed or fence (Coverage B).
  • Your personal property, such as household goods, furniture and electronics (Coverage C).
  • Additional living expenses if you’re displaced from your home because of a covered loss (Coverage D).
  • Personal liability protection that provides coverage if you’re legally responsible for injuring someone else or damaging their property (Coverage E).
  • Medical payments if someone is hurt on your property (Coverage F).

It’s important to understand what’s included and excluded in the coverage you’re purchasing. You may have a need for supplemental coverage, depending on the property you have to protect and where you’re buying a home. Supplemental insurance can cover:

  • High-value items like jewelry, artwork or musical instruments.
  • Water backup and sump overflow.
  • Identity fraud covering legal fees, lost wages and other expenses.
  • Damage from earthquakes.

With so many options, how do you choose an insurance company?

For many, your home is your largest investment. When something goes wrong, you’ll want an insurance company that you trust to be there to help you put things back together. Take time to research your options.

You can look at the ratings and reviews from companies like J.D. Power, Trustpilot, Forbes and U.S. News & World Report. You can also check insurers’ financial strength through AM Best, a leader in rating the financial stability of insurance companies.

Homeowners should consider the structure of companies they’re researching. Many insurance companies are publicly traded with investors and stockholders interested in their performance. Another option worth considering is a mutual company. Mutual insurance companies are owned by their policyholders and don’t have investors’ interests to consider.

What about cost?

There are many factors that can impact your insurance premium like:

  • Estimated replacement cost of your home. This is not the market value of your home; it’s an estimate of what it would cost to rebuild your home in the case of an extreme loss.
  • Frequency of homeowner claims in your area.
  • Likelihood of natural disasters in your area.

Most insurance companies also offer a variety of discounts to customers. Some common discounts include:

  • Paying in full.
  • Bundling (having auto, home, life, etc., with the same carrier).
  • Receiving your bill and policy electronically.
  • Smart home device discounts that reduce the risk of loss.

As you get insurance quotes, you’ll need to select a deductible, which is the amount of money you’ll be responsible for if you file a claim. The higher the deductible, the lower the cost of your insurance policy.

Shopping for insurance can feel intimidating and complex. A quality insurance carrier will spend the time it takes to answer your questions and make sure you’re comfortable with the protection you choose.

For more information on a wide variety of auto, home, and life insurance topics, check out the Amica Insurance Resource Center

Next article