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A First-Timer’s Ultimate Guide to Home Insurance

12 May by 5280 Insurance

There are numerous factors to consider when purchasing a home, such as the appropriate location, property taxes, and the required number of bedrooms. Regardless of how enthralled you are with the design and location of your new house, don’t forget to shop for insurance. Without further ado, read on for this first-timer’s basic guide to home insurance.

Understanding the Need for a Home Insurance

Because they need to protect their investment, banks and financial institutions will almost certainly need homeowners insurance from homebuyers who receive a mortgage.

Homeowners insurance and property taxes are frequently escrowed together. Escrow is a separate account through which your mortgage lender receives and pays your homeowners insurance premiums. Escrows are useful because they relieve financial stress. Certain lenders also demand a mortgage escrow account to hold cash for taxes and insurance. 

Expect to pay a higher interest rate if you find a lender who will waive the escrow account. Then, you are still liable for home insurance and property taxes. 

Although it is not required, your lender may request that you pay your annual homeowners insurance premium in advance. If your lender allows for quarterly or monthly payments, your insurance provider may charge a small installment fee.

The Coverage: Inside a Homeowners Insurance

You should be informed of the scope of your homeowners insurance. A typical homeowners insurance policy contains the following:

  • Dwelling

Pays to replace the structure of your home if it is damaged by any risk other than those specifically excluded, such as floods.

  • Personal Property

Pays to replace or repair personal property that has been stolen or damaged by fire. Insurance can be upgraded to cover any situation, with the exception of those listed as exclusions. The breadth of coverage has been broadened.

  • Liability

Covers injuries and property damage caused by family members. It will cover the cost of a lawsuit filed against you for bodily harm or property damage. 

  • Medical

Pays for minor injuries if a visitor is injured on your property.

  • Miscellaneous

This covers additional expenditures such as hotel bills, meals, and pet boarding if you are unable to live in your home due to a covered disaster like a fire.

What to Look for in a Home Insurance Company

When looking for and comparing home insurance companies, keep the following in mind:

  • The Customer Rating

It is critical to understand how an insurer processes claims to make informed decisions. Customer satisfaction can be priceless. Overall, homeowners insurance companies are highly rated.

  • The Company’s Financial Situation

For a company’s financial strength rating, look to S&P or A.M. Best. These forecast the insurer’s ability to pay future claims. Many insurers publish their ratings on their websites.

Before purchasing insurance, investigate the financial stability of the company. You may be able to transfer insurance carriers or have your coverage administered by the state guarantee association.


Get homeowners insurance as soon as you know the home you want to buy. This allows your insurer to prepare the relevant documentation prior to the closure. Remember, homeowners insurance covers fire, lightning, tornadoes, explosions, vandalism, and theft. As a first-time buyer, you may be confused about the process of obtaining homeowners insurance or the appropriate level of coverage to purchase.

Are you looking for the best insurance companies? 5280 Insurance is here to guide you through protecting your assets. Give us a call today to learn more!

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