Home Buying 101: Why You Need Homeowners Insurance

*Updated January 23rd, 2026

Buying a home is one of the biggest investments you are likely to make. Aspiring homeowners, whether it’s their first time or not, know very well that the entire home buying process is not an easy road to take.

Every step is crucial. Each decision you’re going to make as you go along with the process will either make or break your goal of becoming a homeowner.

Despite the pressure, there are ways to help you avoid the hurdles that can possibly come your way.

Research, proper guidance from experts, preparation and patience are just a few of the many practices that every borrower should do when dealing and navigating the whole entire home buying process.

The Home Buying Process

Borrowers should always be familiar with the home buying process. Being knowledgeable helps set your expectations as you go along and it helps you ask the necessary questions about homeowners insurance, financing, and other details that matter before closing.

The National Association of Realtors created a step-by-step guide to help home buyers deal with the daunting process of home buying.

They did a rundown of specific actions under each step that home buyers need to consider doing to make the entire process go smoothly. The steps are as follows:

1. Get Ready For Homeownership

The first step deals with preparing the important documents that brokers or mortgage lenders often require from you.

Building your credit is part of the process, too. Saving up enough money for a down payment and any other out-of-pocket costs are covered under this step. If you’re financing your home, it’s also a good time to learn what insurance required by your mortgage lender may look like—especially when you need homeowners insurance as part of the closing checklist.

2. Find a Real Estate Professional

This is where home buyers begin scouting for real estate professionals that will help them look for a home to purchase. Friends, family, and colleagues can provide great referrals when seeking a trusted agent.

Home buyers should put this step as one of their top priorities when buying a house. This is something you should start doing even before you look for financing or find prospective properties to consider.

3. Find the Right Property

Looking for the right property to buy sounds easy but there are factors that home buyers should consider when choosing a home to purchase. The price and the neighborhood the property is in are just two of the many considerations you should look into before closing. The location of your home can also influence your insurance premium, what carriers will underwrite, and what add-ons you may need.

4. Finance the Right Property

Finding the right mortgage that works for you is extremely important. You have to go for a financing option that you can fulfill once the mortgage rolls out.

Look for a trusted broker or lender to help you with the application process and make sure you are familiar with the terms and the steps in getting a mortgage. One thing that helps home buyers make the mortgage process go smoothly is getting a mortgage pre-approval. Lenders and sellers are likely to make business with serious home buyers.

When you’re working with a mortgage lender, keep in mind that homeowners insurance required by the lender is often part of the process—sometimes referred to as hazard insurance because it helps protect the home’s structure from certain perils.

5. Make an Offer

This is where you make transactions to home sellers. It pays to be confident and competitive when making an offer.

It also helps to have more than one prospect when you’re house hunting. It’s always possible for your offer to be declined so having a second option can save you time and a lot of grief.

6. Closing and Life After the Big Purchase

Once the sale closes, you can finally call yourself a homeowner. However, the journey is far from over. You still have important things to deal with.

This step includes all the repairs and preparations you’re going to oversee before you move in. Insurance policies also come in during this period. Consider getting the necessary insurance coverage that you might need as a homeowner—especially if a mortgage is involved and your lender says insurance is required before closing.

These policies protect your home and your finances when the unexpected happens. They can also include coverage if someone gets injured on your property, which is part of how insurance protects you as the homeowner.

Why Do You Need Homeowners Insurance?

A smart homeowner should consider getting a homeowners insurance policy. Since buying a house is your largest investment to date, you need home insurance and homeowners insurance coverage that helps safeguard it from different vulnerabilities.

By definition, homeowner’s insurance (also written as homeowner’s insurance or homeowner’s insurance) helps protect your home by covering possible losses to the owner’s home and its assets after a covered event. This type of home insurance policy may also provide liability coverage if an accident happens in the home, meaning it provides liability protection for certain claims.

Mishaps and calamities happen. This is why many homeowners decide to carry insurance even if it isn’t required by law. In many cases, homeowners insurance required depends on whether you have a mortgage—because lenders usually want protection in place for the physical structure of your home.

The home you bought and its specific circumstances will usually dictate the kind of insurance coverage you get. You might have to look into the possible geographical vulnerabilities of your home or any structural aspects that might need protection. If you live near water, flood protection is something that should be considered. And if your area is prone to quakes, earthquake coverage may be worth exploring.

A standard homeowner’s policy typically covers the basics, including:

• Dwelling coverage, which helps protect the structure of your home and can pay to repair or rebuild if it’s damaged by a covered peril or destroyed by a covered loss (such as damage like a fire or sometimes a windstorm, depending on the policy).

• Contents coverage, often called personal property coverage, which helps protect personal property, including personal belongings, and may help pay to replace items after a covered loss.

• Personal liability coverage, also called personal liability coverage, which can help if you’re legally responsible for someone else’s injury or damage. Many policies also include medical payments or medical payments to others for certain medical bills, even if you’re not found liable.

Some policies also cover structures on your property—like a fence or like detached garages—and may include loss of use or loss of use coverage to help pay for living expenses and additional living expenses if your home is being repaired due to a covered event.

Specific add-on coverages could be earthquake coverage, flood insurance, and other options depending on your needs and where you live. That’s why it helps to talk to an insurance agent, compare insurance carriers, and look up guidance from your state’s department of insurance for reliable insurance information and consumer resources.

Make sure to ask from experts and shop around for an insurance quote that fits your home and budget.

Is Homeowners Insurance Included in the Mortgage Payment?

Yes—homeowners insurance can be included in the monthly mortgage payment. In fact, many lenders recommend it, and some mortgage lenders often require an escrow account for taxes and insurance.

Situations like this require the borrower a year’s worth of their insurance premium to be added to their mortgage closing costs. From there, your lender takes one-twelfth of the annual premium from your monthly payments. Depending on your policy, you may also be responsible for an insurance deductible if you ever file a claim.

However, there is still an option to pay homeowners insurance premiums directly to the insurance provider if you prefer to keep it separate from your mortgage dues. Either way, if you have a loan, the mortgage lender typically wants proof you have the right coverage in place.

You’re still part of the equation.

Even with home insurance, it still pays to keep your home safe in your own ways. Natural disasters are something you can’t control, and some events may be covered under your policy, but there are still other ways to protect your home from unfortunate possibilities.

Simple weatherproofing can go a long way. Keeping an updated home inventory has its perks. Also, you can invest in making sure your home’s hallways or stairways are free of different obstacles like loose steps or broken tiles. You can also install proper lighting equipment and reliable security systems to add a layer of protection to your home and belongings—and support your overall coverage for your home.