Home Insurance for New Buyers
Buying your first home means buying insurance for the first time—and most buyers get rushed into a weak policy because the lender just wants “proof of coverage.” Insurers know this. They give new buyers the fastest, cheapest option, not the strongest one. This guide shows you what actually matters before you sign anything.
If you’re brand-new to the basics, skim coverage explained so you understand the core parts of the policy before comparing quotes.
1. Your Lender Only Cares About the Dwelling Coverage
Lenders don’t care about your personal belongings, your liability coverage, or your deductible. They care about the house itself—the part securing their loan.
- You must insure the home for its rebuild cost
- Market value is irrelevant
- Lenders require proof of insurance before closing
- Some lenders require specific deductibles or endorsements
Make sure the dwelling limit is high enough. Underinsuring is one of the biggest pitfalls for first-time buyers.
2. Compare Rebuild Cost Estimates—Don’t Trust the First One
Every insurer calculates rebuild cost differently. Some lowball it to make your quote look cheaper. That becomes a nightmare during a claim.
- Compare at least 3 insurers
- Look for big differences in dwelling limit
- Ask how they calculated the cost (materials, square footage, etc.)
If you don’t know how limits actually work, review policy limits.
3. Don’t Accept ACV Roof Coverage
New buyers get targeted with ACV (Actual Cash Value) roof coverage because it lowers the price. ACV destroys your payout after a storm.
- Older roofs get depreciated heavily
- ACV payouts are often 50–70% lower
- Repairs become your responsibility
Ask your agent directly if your quote uses ACV or RCV. If you don’t know the difference, see ACV vs RCV.
4. Make Sure Your Policy Includes Water Backup Coverage
New homeowners get caught by this constantly. Water backup (drain, sump pump, sewer line) is NOT included in standard policies.
- Add it as an endorsement
- $5,000–$10,000 coverage is typical
- Strongly recommended for basements
If you need the basics, see sewer backup coverage.
5. Don’t Buy the Cheapest Deductible
Cheap premiums usually mean high deductibles. A lot of new buyers grab a $2,500–$5,000 deductible to keep the monthly payment down—then regret it during the first claim.
- Your emergency fund matters more than your premium
- Choose a deductible you can comfortably pay
- Wind/hail deductibles may be percentage-based
A good deductible strategy can save money without ruining you during a loss.
6. Understand What Inspections Trigger
Some insurers inspect new homes shortly after binding a policy. If the home fails, you may face higher deductibles, required repairs, or non-renewal.
- Roof age and condition
- Electrical or plumbing issues
- Tree hazards
- Exterior damage or deferred maintenance
Get ahead of this by knowing what inspectors look for. Review inspection basics.
7. Ask About Discounts, but Don’t Chase Them
Discounts matter, but only after the policy is structurally solid. Bundling helps, but a bad policy with a discount is still a bad policy.
- Security devices
- New home credits
- Claims-free discounts
Use bundling basics as a supplement—not a strategy.
8. What You Should Do Before Closing
- Compare at least 3 insurers
- Verify roof coverage type
- Confirm water backup is included
- Check dwelling limit accuracy
- Choose deductible based on savings—not monthly cost
A strong policy during year one saves you from brutal surprises later.