Home insurance for first-time home buyers
A home is a major investment — not only of time but also of financial resources. Once you’ve closed on your home, the next step is insuring your new asset. Let’s walk through the steps you should take to insure your new home affordably and effectively.
What information do you need to get a homeowners insurance quote?
We’ll outline below the key information you need to get home insurance quotes. Learn more in our in-depth guide to homeowners insurance.
Your prospective insurer will use your address to gather basic details about your home.
Every state allows insurance companies to utilize different factors to determine rates — for both home and car insurance. Begin the insurance comparison process with an understanding of your credit score and claims history. Although home insurance companies will check this via your CLUE report and a soft credit check, anything you don’t reveal will impact your premium.
This includes fire alarms, sprinklers or home security hardware. These components can help lower your overall insurance premium.
This information may come prepopulated with your address, but you should have an idea of your roof’s age. Like your home’s safety features, this can impact your premium.
Most quoting experiences will offer an explanation of what each coverage provides but understanding your assets and how that applies to home insurance coverage will be important. Ask yourself how much liability and personal property insurance you need. Keep any special items such as jewelry, watches and pieces of art in mind.
See more information in our in-depth article discussing what homeowners insurance does and does not cover and some special considerations.
Insuring your first home: tips and important info
Now that we’ve outlined what information you need to get a home insurance quote, let’s detail some key steps and takeaways to keep in mind as a first-time buyer.
1. Research the company’s claims satisfaction
You don’t want to find out after a major claim your current provider doesn’t have a good history of handling claims. Subpar insurance companies will look for opportunities to get out of compensating you for your losses — or at least make it more difficult to recoup funds.
Make sure you check the satisfaction of each insurance company's claims prior to purchasing a policy. Google Reviews, the Better Business Bureau and J.D. Power are good starting points when researching insurance providers.
Google Reviews, the Better Business Bureau and J.D. Power are good starting points when researching insurance providers.
The best home insurance companies for claims satisfaction
The Zebra recently conducted a survey to gauge overall customer satisfaction among the top insurance providers for auto and home coverage. We looked at claims satisfaction, ease of interaction, the likelihood of recommendation, trust and online satisfaction.
For claims satisfaction, these three homeowners insurance companies received the most favorable ratings:
Findings are based on an online quantitative survey of 4,134 current U.S. auto and home insurance customers, with Census-balanced sampling by age, gender and region. Categories with <20 responses are considered insufficient sample size and are not reported. This survey was developed by The Zebra and executed by the independent research firm Maru/Blue in 2021.
A smaller company that offers homeowners insurance in 16 states, National General was the second-best company for claims satisfaction according to our survey.
American Family's home insurance came in third place for claims satisfaction in our consumer survey, and is available in 19 states.
See the rest of our results below:
TOP HOME INSURANCE COMPANIES FOR CLAIMS SATISFACTION
|Rank||Company||Average Customer Satisfaction Rating (out of 5)|
2. Think coverage first, price second
Your home is a major financial investment. Compared to the actual cost of your home, your insurance is significantly less expensive. With this in mind, don't skimp on coverage just to save money. In the event of a catastrophic loss, i.e., a total loss, you'll only be hurting yourself by limiting your coverage.
3. Understand what your insurance covers and how much coverage you need
Understand what perils your policy covers — and doesn't cover. Insurance companies will often exclude certain causes of loss from coverage, providing the option to add coverage back via an endorsement. Review the coverage you might need and how much to purchase with an insurance agent before you need the coverage.
First-time homeowners might not understand the difference between dwelling coverage (calculated at a replacement cost value) and the market value of the home. Dwelling coverage is designed to repair or replace the home if it’s damaged as a result of a covered loss. This cost is independent of the market value of your home.
The dwelling coverage replacement value will not match the market value of the insured home. A mortgage lender might require you to raise the value of your replacement cost and your insurance company might not allow this. Speak to a representative at your insurance company if this happens.
The basic coverage components of a homeowners policy
- Dwelling coverage — protects the home's physical structure
- Other structures coverage — covers a detached garage, gazebo, fence, pool, or other on-property structure
- Personal property coverage — covers the insured party's personal property
- Personal liability insurance — covers damage the insured inflicts on others and their property
- Additional living expenses — compensation for additional living expenses in the event of a home being deemed unliveable
- Medical payments to others — covers the medical expenses of someone injured at the insured property
4. Consider location-specific weather events
If you live in an area prone to natural disasters, it’s unlikely you will have insurance coverage for these perils. Hurricanes or other flooding events will not be covered by your homeowners insurance. If your home is located near the coast, you need to buy flood insurance through FEMA. Other natural disasters worth considering include earthquakes, tornadoes, wildfires, mudslides and sinkholes. If you live in an area prone to these events, consult your insurance company regarding the best course of action.
5. Insure high-value items individually
Coverage for certain valuables will be limited by your insurance company because of their high value — this is known as an insurance company’s sub-limit of liability. Below is a list of the common limitations and typical maximum reimbursement amounts (minus the deductible).
|$200||Money, Gold, Coins|
|$1,500||Jewelry, watches, furs||Theft-only|
If you own any of these items, consider adding a personal property endorsement or scheduled endorsement to your insurance policy. A personal property endorsement will raise your content coverage for that entire item classification — for example, the total value of your jewelry collection. A scheduled personal property endorsement is a common approach when insuring one very valuable item, such as an engagement ring. This would require an appraisal, but is the best way to protect your belongings.
6. Consider bundling policies
You can earn discounts if you bundle multiple policies with the same company. By bundling policies with the same company from which you carry homeowners insurance, you could earn a discount on each of the products.
7. Compare rates carefully
Once you have an idea of which coverage — and how much insurance — you need, compare quotes from as many insurance companies as possible. Research reviews and compare premiums. Although it can be a tiring process, it’s certainly easier than dealing with a sub-optimal insurance provider after a claim.
Find homeowners insurance in just a few minutes online.
What is the average cost of homeowners insurance?
The average price will vary based on your location, your home, and you. Based on our methodology, we checked insurance rates from the top carriers in the US. Bear in mind, these rates should be evaluated as rough averages. Based on your location and coverage needs, your rates will differ.
|Insurance Provider||Average Annual Premium|
To see average home insurance rates by other factors, check out our Guide to the The Average Cost of Home Insurance in 2022.
First-time home buyer programs
Homeownership may seem out of reach for some Americans, but there are many government programs that make it possible for even those with a low or moderate income. Such programs are available to new home buyers at both the national and state level. These programs are designed to help new homeowners with down payments, closing costs, home loans and finding competitive interest rates. To help you navigate this oftentimes confusing area of finance, we put together a list of some of the options to help get you started.
Home buyer programs
Some of the following programs are available through the U.S. Department of Housing and Urban Development (HUD). Most of these programs can directly benefit potential home buyers by offering loans or grants, though all are meant to increase the ability of average- or lower-income Americans to purchase homes.
The first stop for many potential home buyers seeking their first mortgage is an FHA loan. While the government itself isn't technically providing the loan, the Federal Housing Administration does insure your loan, allowing you to get a better interest rate from your lender, oftentimes better than a conventional loan. First-time home buyers can benefit from low down payments and low closing costs. Furthermore, with the backing of the FHA, qualifying for credit from a mortgage lender can be much easier.
Fannie Mae and Freddie Mac were created by Congress to help middle- and low-income home buyers find reasonable loans. These government-chartered programs don’t actually provide loans themselves, but work with mortgage lenders to back home loans or to purchase them on the secondary market, creating liquidity in the market and allowing lenders to write more loans. Both offer a number of resources to prospective homeowners.
This HUD program offers homes in selected "rejuvenation areas" with discounts as high as 50% of the list price. To be eligible for the program, you must be a trained emergency medical technician, firefighter, law enforcement official or teacher (pre-K through 12th grade). Furthermore, you must commit to live in the home for a minimum of 36 months.
HUD offers programs to help residents of public housing the opportunity to purchase their housing units. Through HUD’s Section 32, low-income families can find themselves on the path to homeownership. More information can be found via your local public housing authority.
The Section 184 Indian Home Loan Guarantee program is designed to assist Native American communities by providing access to capital and a pathway to homeownership. Section 184 loans are available for homes on or off native lands. These can be previously existing homes, newly constructed, or rehabilitated. The loans can also be used to refinance current loans.
The Section 184A Program is a similar federal program available for native Hawaiians to access.
If you qualify for home financing, you could also benefit from the Energy Efficient Mortgage (EEM) program. Essentially, this allows borrowers to qualify for a larger loan in order to make upgrades to the home’s overall energy efficiency. Borrowers could also use an increased loan amount to buy a newer or more energy-efficient home. Refinancing options are also available to retrofit your home with energy-saving upgrades.
Those looking to buy a house in need of repairs could find HUD’s Section 203(k) program particularly helpful. Section 203(k) insures loans made for the use of home rehabilitation, allowing homeowners to make minor or drastic repairs to the home. The program is available to all prospective buyers, including first-time home buyers.
Veterans Affairs also offers a number of loan assistance programs to veterans. VA loans are available to active-duty and retired servicemen and women. These mortgage loans are technically provided through private lenders, though a portion of the loan is guaranteed by the VA, providing you with better terms. Alongside home loan assistance, the VA also offers grants and can also help with refinancing. In addition to the options listed below, make sure to research state-specific benefits or programs that may be available where you live.
- Purchase Loans and Cash-Out Refinance: This is the VA’s primary VA loan and home refinance option, allowing for competitive interest rates and low or no money down upfront.
- Interest Rate Reduction Refinance Loan (IRRRL): This mortgage program helps borrowers secure better interest rates on a previous VA loan.
- Adapted Housing Grants: Assists with home adaptations for veterans with permanent disabilities.
- Native American Direct Loan (NADL): This program is available for eligible veterans (spouses) who are of Native American descent and allows assistance with buying or building a home on federal trust land.
For those in rural areas, USDA loans can provide a great opportunity for homeownership. The program guarantees 90% of a home loan for borrowers who wish to build, purchase or rehabilitate an eligible rural property. In many cases, this could be done for no money down.
To be eligible for a USDA loan, you must meet the following criteria:
- Meet income requirements (not exceeding 115% of national median income)
- Be a U.S. citizen, Qualified Alien, or U.S. non-citizen national
- Use the property as your primary residence
- Live in an eligible rural area
In addition to the federal programs listed above, many states offer their own programs for first-time home buyers. Each state has its own types of programs providing various levels of assistance. This could include downpayment assistance, closing cost assistance, or even grants in some cases. Furthermore, many states also offer comprehensive home buyer education programs that can help prospective buyers navigate the best state and federal options for their needs.
Depending on the program — and the state in which you live — you may have to meet certain eligibility criteria, including credit scores, income limits and caps on the purchase price of your home. For instance, some low-income borrowers may not be eligible for all programs, but shouldn’t be discouraged from looking into all of the available options.
In short, those making their first foray into homeownership would do well to research these state-level assistance programs. This list below links to each state's housing authority where you can find more information about first-time home buyers assistance in your state.
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- Security Systems and Homeowners Insurance Discounts: What You Need to Know
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About The Zebra
The Zebra is not an insurance company. We publish data-backed, expert-reviewed resources to help consumers make more informed insurance decisions.
- The Zebra’s insurance content is written and reviewed for accuracy by licensed insurance agents.
- The Zebra’s insurance content is not subject to review or alteration by insurance companies or partners.
- The Zebra’s editorial team operates independently of the company’s partnerships and commercialization interests, publishing unbiased information for consumer benefit.
- The auto insurance rates published on The Zebra’s pages are based on a comprehensive analysis of car insurance pricing data, evaluating more than 83 million insurance rates from across the United States.