Homeowners Insurance Tips for First-Time Buyers

By Larry Anderson and the Mercury Team

Buying your first home is a huge milestone. It’s exciting, rewarding, and yes, sometimes a little overwhelming. The homebuying process involves numerous moving parts, from inspections and mortgages to packing boxes and meeting new neighbors. With so much going on, it’s easy to overlook one of the most important steps: protecting your investment with the right homeowners insurance.

This article will explain the ins and outs of homeowners insurance, so first-time homebuyers like yourself can feel confident in protecting your new investment.

What Is Home Insurance and Why Do You Need It?

Home insurance is a financial safety net that helps protect your house, belongings, and finances from unexpected events such as fire, theft, storms, or accidents.

“Homeownership comes with both rewards and risks,” says Larry Anderson, Director, UW Operations for Mercury Insurance. “Having homeowners insurance ensures that when the unexpected happens, you’re not left facing those challenges on your own. It’s one of the most important ways to protect your investment and your family’s future.”

You might wonder: Do you need to have homeowners insurance? While there are no laws mandating home insurance, most mortgage lenders require it before they’ll approve your loan. That’s because they want to make sure the property they’re helping you buy is protected in case of damage. Even if you’ve paid cash for your home, coverage is still highly recommended. Without it, you’d be on the hook for costly repairs or liability claims.

The bottom line is that homeowners insurance gives you peace of mind. You’ll rest easy knowing your home and the life you’re building inside it are protected from life’s unpredictable moments.

What Coverage Types Should First-Time Buyers Know?

When you’re shopping for first-time homeowners insurance, it’s easy to get lost in the jargon. So, what does home insurance cover? Most policies boil down to these key coverages:

Dwelling Coverage

Dwelling coverage protects your house’s physical structure. This includes the foundation, walls, roof, and anything permanently built in or attached, like a garage, cabinets, or your heating and cooling system. If a covered event damages these parts of your home, your policy can help with the cost to repair, replace, or rebuild them.

Personal Property Coverage

Personal property coverage protects your belongings (e.g., furniture, electronics, clothes, and appliances) if they’re stolen, damaged, or destroyed in a covered event. Many policies cover items even if they’re not in your house at the time. For example, you may get coverage if your laptop is stolen from your car.

Liability Coverage

Liability coverage protects you financially if someone gets hurt on your property or if you accidentally damage someone else’s belongings. It can help cover medical bills, legal costs, repairs, and settlements.

Additional Living Expenses

If your home becomes unlivable after something like a fire or severe storm, this coverage can help pay for temporary housing, meals, and other costs while repairs are being made.

How Much Homeowners Insurance Do I Need?

The answer isn’t black and white. The right amount of coverage depends on your home and what you want to protect. Here are a few simple guidelines to help you figure it out.

Match Coverage to Rebuild Costs

Your dwelling coverage should be based on what it would cost to rebuild your home from the ground up, not its current market value. Market value includes the land and fluctuates with the housing market, but your insurance should focus on the actual cost of materials and labor to repair or reconstruct the structure.

Think About High-Value Items

Most policies come with limits on certain belongings, like jewelry, collectibles, or art. If you own things that are worth more than those limits, you’ll want to add extra protection so you’re fully covered. You can do this through a scheduled personal property endorsement on your policy.

Avoid Being Underinsured

It’s tempting to cut corners to save money, but being underinsured can cost you much more in the long run. If your coverage is too low, you may have to pay out of pocket for part of the repairs or replacements after a major loss. A good rule of thumb is to review your policy with an insurance agent every year. That way, your coverage always aligns with your current needs and budget.

What Factors Affect Your Premiums?

When you start shopping for homeowners insurance, you’ll quickly notice that prices can vary a lot. That’s because insurers look at several different factors to figure out your premium. These can include:

Location and Local Risks

Where you live plays a big role in what you’ll pay. Homes in areas prone to wildfires, floods, or severe storms usually cost more to insure because the risk of damage is higher. Even crime rates in your neighborhood can have an impact, since theft and vandalism are covered under most policies.

Age and Condition of the Home

An older home or one that hasn’t been updated in a while may come with higher premiums because older roofs, plumbing, or electrical systems are more likely to fail. On the flip side, a newer home with modern systems and safety features may qualify you for lower rates.

Credit Score and Claims History

Insurance companies often look at your credit score and your track record with past claims. A strong credit score and a clean claims history can help lower your rate, while multiple past claims may push it up.

Coverage Choices

The amount of coverage you pick and the deductible you choose make a big difference. More coverage means more protection, but also a higher monthly cost. Picking a higher deductible can lower your premium, but it also means you’ll pay more out of pocket if you ever file a claim.

How Can You Lower Your Home Insurance Costs?

Owning a home is expensive, but there are ways to save on home insurance to help keep your bill as low as possible:

• Bundle your policies: One of the easiest ways to save is to bundle your home and auto insurance. Insurers reward customers who bring multiple policies under one roof with a discount on both.
• Add safety features: Installing features like smoke detectors, security alarms, and smart locks makes your home safer, and insurers typically reward your proactive measures with lower rates.
• Choose a higher deductible: Your deductible is what you pay out of pocket before insurance kicks in. Raising it can bring down your monthly premium, but make sure it’s an amount you can comfortably afford if you ever need to file a claim.
• Keep your credit in good shape: Paying bills on time, keeping balances low, and maintaining healthy credit habits may help you qualify for better prices.

What Should You Look For in a Home Insurance Policy?

When buying coverage for the first time, there are a few things to look for to ensure you’re getting the best policy for your new home:

• Customizable coverage options: Your policy should fit your unique needs. Look for a plan that lets you adjust coverage amounts, add protection for valuables, or include extras like flood or earthquake insurance if you live in a higher-risk area.
• Clear exclusions and limits: Insurance policies should explain what’s covered and what’s not. Make sure you understand the limits for personal property, liability, and any exclusions (like floods and earthquakes).
• Strong claims support: Choose a company with a solid reputation for customer service and a track record of supporting homeowners during the claims process. Fast, reliable claims handling can make a stressful situation much easier to manage.

Why Work With Mercury Insurance?

Mercury Insurance is a perfect partner for first-time homebuyers. Here’s why:

Affordable Coverage That Fits Your Budget

Mercury believes protecting your home shouldn’t cost a fortune. Our policies are designed to give you the coverage you need at a price that makes sense, so you can focus on enjoying your new place without worrying about the bill.

Personalized Help from Local Agents

With Mercury, you don’t have to figure everything out on your own. Local agents take the time to get to know you, walk you through your options, and help you pick the coverage that’s right for your home and lifestyle.

Plenty of Ways to Save

We offer several discounts to help lower your premium, including our multi-policy discount. When you bundle home and auto insurance, you can get up to 14.7% off your homeowners insurance.

24/7 Claims Support

Mercury’s claims team is available around the clock, so if something happens, you can file a claim online or call our claims hotline at (800) 503-3724.

Final Thoughts

The right policy will protect your house, your belongings, and your peace of mind, giving you the confidence to enjoy your new place without worry.

Before you finalize your policy, take the time to review your coverage needs, think about the value of your home and belongings, and make sure you’re not leaving any gaps unprotected.

Mercury makes it simple for first-time buyers to get affordable, reliable coverage with personal support every step of the way.

Contact us today for a fast, free quote!