Buying your first home is one of the most exciting financial milestones you can reach, but it also comes with a steep learning curve. Mortgage rates, down payments, inspections, closing costs, and moving expenses all add up. With so many decisions to make, your homeowners insurance policy can be easy to overlook, but waiting too long may lead to unexpected costs.
Monthly mortgage payments are only part of the cost of owning a home. Homeowners insurance also affects your monthly housing budget, making it important to request insurance estimates early. Doing so gives you a clearer picture of your total homeownership costs before you buy.
Why Are Homeowners Insurance Costs Rising?
Homeowners insurance premiums have increased across the country, including for many first-time buyers. Several market trends are contributing to higher rates.
- Higher rebuilding costs: Inflation has increased the price of construction materials, labor, and repairs, making claims more expensive to settle.
- More costly weather-related losses: Hurricanes, hail, wildfires, severe storms, and other extreme weather-related billion‑dollar disasters have led to higher claim payouts. Insurance companies adjust rates to reflect overall loss trends, even for homeowners who have never filed a claim.
- Regional risk: Insurance companies also consider state regulations and regional catastrophe exposure when setting rates, so premium increases vary based on your location and your homeowners insurer’s assessment of regional risk.
What Else Affects the Cost of Homeowners Insurance?
While market conditions influence rates, your premium is also based on your home’s characteristics and the coverage you choose. Additional factors that affect the cost of homeowners insurance include:
- The buyer’s financial responsibility score
- The age of the home
- Construction materials
- Roof age and condition
- Square footage
- Electrical, plumbing, and HVAC system type, age and condition
- Proximity to fire protection services
- The property’s and homeowner’s claims history
- Coverage limits and deductible
- Discounts for bundling home and auto insurance with the same company
- Smart home features
Two homes with the same purchase price can have very different insurance costs. A home with a newer roof, updated electrical systems, and fewer prior claims may cost less to insure than a similar home with aging systems or a history of losses.
Why Should First-Time Homebuyers Get Insurance Quotes Before Making an Offer?
Many buyers wait until they are under contract to request insurance quotes, which can lead to unexpected budget surprises.
Insurance premiums are an important part of the total cost of homeownership, alongside mortgage payments, property taxes, community association fees, and maintenance. Getting an estimate before making an offer gives you a more accurate picture of what you can comfortably afford.
Early quotes also make it easier to compare properties and avoid unexpected costs before signing a purchase agreement. In some cases, insurance premiums may even influence which home is the better financial fit.
What Coverage Should New Homeowners Pay Attention To?
Make sure as a new homeowner, you understand your policy coverage, not just your premium costs. The following are important considerations:
Dwelling Coverage
Dwelling coverage pays to repair or rebuild your home after a covered loss. Focus on replacement cost, not just market value. Construction costs often differ from the purchase price. Replacement cost coverage helps you replace personal belongings with new items, not just their depreciated value, unlike actual cash value, which accounts and reduces the payout for normal wear and tear.
Liability Protection
Liability coverage provides financial protection, paying legal expenses, settlements, and judgments if someone is injured on your property and you are found responsible. This protection shields your finances from costly lawsuits.
Additional Living Expenses
If a covered claim makes your home uninhabitable, additional living expense coverage pays for hotel stays, temporary housing, meals, and related costs while repairs are underway. This coverage keeps you from paying out of pocket while your home is restored.
Check your homeowners policy limits for this coverage — adequate coverage here can prevent high out-of-pocket costs during a lengthy repair/rebuild.
Flood and Earthquake Coverage
Standard homeowners insurance policies do NOT usually cover flood insurance needs or earthquake insurance — these require separate insurance policies or endorsements. If you’re in an area prone to either, your mortgage lender may require additional coverage. You may need separate policies or endorsements depending on your location and risk.
Smart Planning Can Help Make Homeownership More Affordable
Owning a home is a major milestone. Smart buyers know affordability goes beyond the purchase price. Homeowners insurance protects your largest financial investment.
By requesting homeowners insurance quotes before making an offer, you can make well-informed decisions, compare coverage options, avoid surprises, and understand property risks — including theft, fire, and natural disasters. Review coverage options early to ensure your protection matches rebuilding costs and your financial goals.
If you are buying a home and need expert advice on home insurance costs, coverage options, or property-specific risks, contact Brooks, Todd & McNeil. Our team will help you evaluate coverage before closing and move in with a clear understanding of your protection and ongoing costs.
About the Author
Stephen G. Todd, CPCU CIC, is the owner, President and CEO of Brooks, Todd & McNeil, bringing more than three decades of experience across underwriting, claims, and agency leadership. He began his career with Travelers Insurance Company, where he held roles in Home Office Finance and National Account Claims litigation, before serving as a commercial lines underwriter with American States Insurance Company. Since joining Brooks, Todd & McNeil in 1991, Stephen has led key operational areas and helped drive innovation, including the development of the insurance industry’s first real-time personal lines comparative rating system. A recognized industry leader, he has served on numerous carrier advisory councils and remains actively involved in both professional and community organizations.
About Brooks, Todd & McNeil
Since 1839, the independent agents at Brooks, Todd & McNeil have been pleased to offer our community the best and most affordable policies from a variety of providers. To learn more about our products and services, contact us today at (800) 448-4567.