How to Get Homeowners Insurance

When you buy a home, it's not just your mortgage and property taxes you'll need to pay for every month. Homeowners insurance is one of the expenses of homeownership you'll also need to deal with. Here, we'll talk about how to get homeowners insurance.

What is homeowners insurance?

Homeowners insurance is insurance that protects you from certain types of property damage. It covers your personal property that's damaged during a fire or weather event. It also protects you in case someone gets injured on your property and decides to sue.

Every homeowner should have homeowners insurance. Mortgage lenders also require it. Before you can finalize a home loan, you must show proof that you have insurance for your property.

5 steps to buy homeowners insurance

Here's how to find the right homeowners insurance policy for you.

1. Read up on how homeowners insurance works

It's important to learn what the limits to your coverage are so you know what you're signing up for. The terms of each policy vary by insurance carrier, but it's good to get a general sense of what to expect.

For example, homeowners insurance won't cover all damage to your home, and it generally won't cover repairs that are the result of wear and tear. Do some research online or ask an insurance agent if you're working with one.

2. Gather information about your home

You'll need to give an insurance provider information about your property when you apply for homeowners insurance. Specifically, an insurance agent may ask about:

• The year your home was built
• The number of square feet
• The number of floors
• The type and age of the roof
• The type of heating and cooling system

Also be prepared to answer questions about home features that could impact your rates, like swimming pools and hot tubs.

3. Figure out how much coverage you need

The purpose of homeowners insurance is to protect you from financial losses, so you'll need to make sure you have enough coverage. Homeowners insurance generally breaks down into these types of coverage:

• Dwelling coverage: This should equal the replacement cost of your home (the cost of rebuilding your home if it were destroyed)
• Personal property coverage: This covers your furniture and other belongings
• Loss of use coverage: This pays for you to live elsewhere temporarily if your home is damaged and you need to vacate for a while
• Liability coverage: This protects you from lawsuits if someone gets injured on your property

Related: How Much Homeowners Insurance Do I Need?

4. Figure out if you want a higher premium or a higher deductible

Your homeowners insurance premium is the fee you'll pay for your insurance policy. Your deductible is the amount you'll pay when you make a claim before your insurance kicks in.

If you have a $1,000 claim with a $500 deductible, you'll pay $500 (your deductible) and then your insurer will cover the rest of the claim.

Generally, the more expensive your premium, the lower your deductible, and vice versa. So you'll need to decide what makes the most sense for your situation.

Here's an example where it could pay to choose a plan with a higher deductible and lower premium:

• You have a newer home
• Live outside an extreme climate zone
• Don't expect to file many claims soon

5. Shop around for different quotes

Each homeowners insurance company sets its own rates. Just like it's important to compare mortgage rates, you should also compare offers for homeowners insurance. You can call insurance companies or use an insurance agent to get quotes for you.

When reading each insurance quote, pay attention to:

• Premiums
• Deductibles
• Coverage amount

6. Choose the best policy and get your paperwork signed

Once you land on the right insurance policy, you'll need to sign some paperwork to put your coverage into place.

Usually, you'll have to pay for your first year of homeowners insurance premiums up front. From there, your insurer may offer other payment options -- like quarterly or monthly payments.

How can I save on homeowners insurance?

There are things you can do to save money on homeowners insurance, like:

• Add security features to your home: Like an alarm system, storm shutter, or fence.
• Remove risky home features: Like an above-ground pool or hot tub.
• Bundle auto insurance and homeowners insurance: You're likely to score a lower rate if you buy both policies from the same company.
• Have a good credit score: Sometimes, insurance companies offer lower premiums to homeowners with better credit.
• Stick with the same insurer: You may be eligible for a discount if you've been with the same company for years.

Certain aspects of your home, like its location, may drive up the cost of homeowners insurance, and those can't be helped.

Do I need to get homeowners insurance?

Yes -- you probably do. Generally, you must have homeowners insurance to close on a mortgage. Technically, you may be able to dump your homeowners policy once your mortgage is paid off. But that's not recommended.

If your home is damaged or someone gets hurt on your property -- and you don't have insurance -- you won't have financial protection. So it's a good idea to have homeowners insurance for as long as you own your home.

Homeowners insurance is an unavoidable expense of buying a home, so don't let its cost throw you off guard. Rather, account for the cost of a home insurance policy before you buy so you don't get in over your head. A good bet is to use a mortgage calculator to estimate your monthly costs based on the loan amount you expect to borrow and the length of your repayment period. That way, you'll get a breakdown of your expenses. And you can make sure they work for your budget before you buy a home. The last thing you want to do is take on too much house and fall behind on other living expenses.

Still have questions?

Here are some other questions we've answered:

• How Much Homeowners Insurance Do I Need?
• What Is Homeowners Insurance and How Does It Work?
• What Is Mortgage Insurance?