Somewhere in the weeks before closing, your lender will ask for proof of a homeowners insurance policy. It’s an easy step to put off, but the policy you choose affects your monthly payment, your coverage if something goes wrong, and how smoothly your closing goes. Here’s what buyers in Centerville and Washington Township should know as they start shopping.
Why Lenders Require Proof of Insurance Before Closing
Your home is collateral for the loan, so your lender wants assurance that it’s protected against fire, storm damage, and other covered losses. Most lenders require an active policy, with the first year’s premium paid, before they’ll finalize your loan. Many buyers choose to have that premium collected through their escrow account going forward, so it’s built into the monthly mortgage payment rather than paid as a separate annual bill.
What a Standard Policy Typically Covers
A standard homeowners policy generally covers the structure of your home, your personal belongings inside it, liability if someone is injured on your property, and additional living expenses if you’re temporarily displaced by a covered loss. Coverage amounts and exclusions vary by insurer, so it’s worth reading the declarations page closely rather than assuming one policy looks like another. Older homes, homes with older roofs, or homes with certain features may come with different underwriting requirements.
Factors That Can Affect Your Premium
Insurers weigh a number of factors when quoting a policy: the age and condition of the home, the age of the roof, the home’s construction materials, your claims history, and the coverage limits and deductible you choose. Bundling your homeowners policy with an auto policy through the same carrier can sometimes lower the overall cost. Because every insurer weighs these factors differently, premiums for the same home can vary noticeably from one company to the next.
When and How to Start Shopping for a Policy
Once you’re under contract, it’s a good time to start requesting quotes rather than waiting until the week of closing. Getting quotes from a few different insurers, or working with an independent agent who can shop multiple carriers at once, gives you a better sense of your options. Have your purchase agreement and basic details about the home’s age, square footage, and construction on hand, since insurers will ask for that information to prepare an accurate quote.
Frequently Asked Questions
Do I have to buy homeowners insurance before closing?
Yes, if you’re financing the purchase. Lenders require proof of an active policy, with the first year’s premium paid, before they’ll release funds at closing. Cash buyers aren’t required by a lender to carry insurance, but it’s still strongly recommended to protect the investment.
Can I switch insurance companies after I close?
Yes. You’re not locked into the policy you used to close. Many homeowners revisit their coverage and shop for better rates at renewal time or whenever their circumstances change, and switching carriers is generally straightforward as long as there’s no lapse in coverage.
Is flood insurance included in a standard policy?
No. Flood damage is typically excluded from standard homeowners policies and requires a separate flood insurance policy. Your lender will let you know if flood insurance is required for your specific property based on its flood zone designation.
How far in advance should I start getting quotes?
As soon as you’re under contract is a reasonable time to start. That gives you several weeks to compare quotes, ask questions, and choose a policy without feeling rushed as closing approaches.
Kelly Nation is a real estate agent with RE/MAX Alliance serving Centerville, Ohio, Washington Township, and the greater Dayton area. Thinking about buying or selling in the area? Reach out to Kelly Nation with RE/MAX Alliance at 937-609-5852 to get started.
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Kelly Nation | RE/MAX Alliance
Local real estate guidance in Centerville, Washington Township, Kettering and nearby communities.