When buying a home for the first time, you may be focused on your monthly mortgage payment, your access to good schools, your commute, and the safety of the neighborhood. But don’t forget to consider homeowners insurance. Most lenders require it, and where you live and your home’s construction materials factor heavily into your insurance costs.

Homeowners insurance gives you four important financial protections: 

• Helps pay for structural repairs if covered damage occurs 
• Helps pay to repair or replace your home’s contents if they are damaged in a covered event 
• Helps pay compensation if someone gets hurt on your property 
• Helps with legal and liability costs if you accidentally injure someone or damage their property 

While it offers huge financial protection, home insurance can be confusing. This guide aims to clear up some of the most important questions. 

In this guide to home insurance for first-time buyers, you will find: 

• 5 types of homeowners insurance coverage 
• 7 factors that affect the cost of homeowners insurance 
• The benefits of connecting with an insurance agent early 

5 Types of Homeowners Insurance Coverage

Though your lender may require only dwelling coverage, you may wish to extend your homeowners insurance to financially protect yourself from other losses. Here are five common options homeowners choose to include in their home insurance: 

1. Structural damage: Helps pay to repair your home and any structures on the property damaged by a covered loss (e.g., fire, storm, vandalism, broken pipes
2. Personal property loss: Helps pay to repair or replace contents or personal belongings for covered damage, theft, and any other peril your policy cover
3. Personal liability: Helps cover medical and legal costs if someone is injured on your property or someone in your household, even a pet, accidentally injures an outside party or damages their property 
4. Riders or special endorsements: Can cover particular needs such as collectibles or antiques, expensive sporting equipment, fine jewelry, and other specialty items or collections; sewer and drain backup; identity theft; personal cybersecurit
5. Additional home policies: Can cover flood, which usually must be bought as a stand-alone policy; earthquake, which is obtained separately in earthquake-prone regions but can be added as a rider in most of the country; and wind and wildfire, which are excluded or severely limited in standard homeowners insurance in certain locales 

7 Factors That Affect the Cost of Homeowners Insurance

The total premium homeowners pay for insurance is unique to each home and the choices you make regarding coverage. Here are seven factors that play the biggest role in the cost of homeowners insurance:

1. Coverage: Premiums are based on the dollar amount of your coverages and the types of protection you choose.
2. Deductible: This is the amount of financial loss you are willing to pay out of pocket before your insurance kicks in. Choosing a higher deductible typically lowers the premium you must pay, but you must be sure you have those emergency funds set aside.
3. Home value: Generally speaking, the more expensive the home, the more expensive the insurance. 
4. Construction features: The home’s characteristics—things like the age of your home, type of construction, wiring, type and age of roof, etc.—can all affect your premium.
5. Insurance history: A history of making insurance claims (even with renters insurance) can raise your premium.
6. Location: Not only does your geographic location make a difference in insurance availability and price, so do things like distance from fire hydrants, your municipality’s fire rating, and the crime rate in your area.
7. Personal information: Information like age, credit history, and even marital status can change how much you pay for insurance.  

The Benefits of Connecting With an Insurance Agent Early

While your homeowners insurance policy won’t start until you close on your new home, it’s useful to have a plan ready to go. That way, you’re not scrambling at the last second and stuck with whatever insurance you can secure. 

Being proactive helps for three reasons: (1) you’ll be able to shop for the best coverage and price, (2) you’ll know approximately how much a policy will cost for that particular home, and (3) the quote will be ready to go once you choose a home so your closing isn’t delayed. It’s common for lenders to require proof of coverage a few days before closing. 

At a minimum, you’ll need the following information to start the selection process with your agent: 

• Home’s address 
• Personal information (for claims and credit check) 
• Home’s added safety features (e.g., fire alarms, home security, etc.) 
• Roof’s age  
• Types and amount of insurance coverage needed 

Your insurance agent will help you compare policies, prices, insurance companies, and coverages so you get a homeowners policy that you feel most comfortable with. This process can take an hour or two, and you will be asked many questions about your possessions, assets, and plans for your future. Coming prepared to discuss these issues will expedite the process. 

For help finding the best homeowners insurance coverage for you, request a quote here. 

Source:  Bankrate