Homeowner’s Insurance

Once you are under contract, it’s a good idea to begin shopping for homeowner’s insurance right away.

Insurance quotes can vary significantly from company to company, and sometimes the insurance provider will need additional information about the property before they can finalize coverage. Because of this, the process can occasionally take longer than expected. I recommend requesting quotes early so you have plenty of time to compare your options.

Choosing Your Policy Effective Date

Your homeowner’s insurance policy must be effective on or before your closing date.

Insurance companies can sometimes have difficulty changing the effective date after a policy has been finalized. If your closing date is still uncertain, it is perfectly fine to obtain quotes now and wait until you are closer to closing before finalizing the policy.

When you do finalize it, you may still need to estimate your closing date. In that situation, I recommend choosing the earliest realistic closing date as the policy effective date.

This helps avoid a closing delay if the insurance company is unable to move the effective date earlier afterward. The worst-case scenario is simply that your insurance begins a few days before you actually close.

Coverage

Your homeowner’s insurance policy generally needs to provide replacement cost coverage for the dwelling and meet your lender’s minimum coverage requirements.

The roof typically can be insured on an Actual Cash Value (ACV) basis, but the remainder of the dwelling should be insured on a replacement cost basis.

Information Your Insurance Company Will Need

Before your insurance company can finalize the policy, they will typically need:

• Your loan number

• The lender’s mortgagee clause

We will provide this information to you during the loan process. If you have not received it or your insurance agent needs it again, please feel free to reach out to us.

What to Send Us

Once your homeowner’s insurance policy has been finalized, please ask your insurance company or agent for:

• The Declarations Page

• The Invoice or Premium Statement

Please send both documents to us so we can update your loan file and prepare for closing.

Paying for Your Homeowner’s Insurance

I generally recommend not paying the first-year homeowner’s insurance premium directly to the insurance company before closing.

Your first-year homeowner’s insurance premium is already estimated as part of your closing costs, and we will arrange for it to be paid to the insurance company as part of the closing.

If your insurance company asks you to pay the premium in advance, please check with us before doing so. This helps prevent you from accidentally paying for the same insurance premium twice or creating unnecessary adjustments before closing.

Note

Questions?

If you have questions about the insurance requirements, need your loan number or mortgagee clause, or your insurance agent needs information from us, please reach out. We are happy to help coordinate with your insurance company and keep everything moving toward closing.