First-Time Homebuyer Insurance Checklist

Buying your first home involves inspections, appraisals, loan documents and a long list of deadlines. Homeowners insurance often gets left until the last week of escrow, which can be a costly mistake. In some areas, especially wildfire, flood or coastal zones, finding coverage can take time, and the cost can change what you can afford. This checklist walks through insurance at each stage of the purchase.

Before you make an offer

1. Get a quick insurance estimate

Once you have a serious property in mind, ask a broker for a preliminary quote. Share the address, year built, square footage, roof age and type, and any upgrades. In parts of California, availability and pricing vary greatly from one neighborhood to the next. A broker can tell you early whether the home is likely to need the California FAIR Plan plus a difference-in-conditions policy. See our California FAIR Plan guide in Spanish or the live FAIR Plan explainer.

2. Check natural hazard risk

• Flood: look up the flood zone at the FEMA Flood Map Service Center. If the home is in a high-risk zone and you have a federally backed mortgage, flood insurance will be required. See our flood guide.
• Wildfire: California sellers must disclose whether a property is in certain fire hazard severity zones. Ask about defensible space and home hardening. See our wildfire mitigation guide.
• Earthquake: homeowners policies exclude earthquake damage. Get a quote for earthquake coverage if you're in a seismic area. See our California earthquake guide.

During escrow

3. Ask the seller for the property's claims history

Only the owner can order a CLUE report on the property, but you can request it from the seller. A history of water, mold or roof claims can affect insurability and point to issues for your inspector. See our CLUE report guide.

4. Use the inspection to inform insurance

Insurers care about:

• Roof age and condition. Older roofs can lead to higher prices, actual cash value roof settlements, or declines.
• Electrical panels. Some older panel types are a concern for insurers.
• Plumbing. Polybutylene or galvanized pipes can be an issue.
• Water heaters older than their expected life.
• Signs of water damage or mold.

Ask your inspector to note these and share the report with your broker.

5. Understand lender requirements

Your lender will require:

• Dwelling coverage at least equal to the loan amount or the home's replacement cost, depending on the lender. Your coverage should reflect the cost to rebuild, which may differ from the purchase price.
• The lender listed as mortgagee on the policy.
• Maximum deductibles, sometimes as a percentage of coverage.
• Flood insurance if the home is in a Special Flood Hazard Area.
• Proof of insurance (a binder or declarations page) before closing.

6. Choose the right policy type

• Single-family homes: HO-3 or HO-5. See our declarations page guide to understand coverages.
• Condos and townhomes: an HO-6 policy that fits the HOA's master policy. See our HOA master policy gaps guide.
• Homes with an ADU or rental unit: tell your insurer. See our ADU insurance guide.

7. Decide on key coverage options

• Extended replacement cost to protect against rising construction costs
• Replacement cost on contents
• Water backup coverage
• Higher liability limits, and consider an umbrella policy
• Scheduled valuables such as engagement rings

8. Escrow accounts

Many lenders collect homeowners insurance and property taxes monthly with your mortgage payment and pay them from an escrow (impound) account. The insurance premium for the first year is typically paid at closing. If premiums rise at renewal, your monthly payment can change after the lender's annual escrow analysis. The Consumer Financial Protection Bureau explains escrow accounts: CFPB – Escrow accounts.

9. Title insurance is different

Title insurance protects against problems with the property's title, such as liens or ownership disputes. It's separate from homeowners insurance and is usually arranged through escrow. Lenders require a lender's title policy; an owner's title policy protects you.

Before closing

10. Bind coverage and send proof

Bind your policy so it starts on the closing date (or when you take possession), and send the binder or declarations page to your lender and escrow officer. Confirm the named insureds match the names on title, including any trust.

11. Set up home safety

• Change locks and install smoke and carbon monoxide alarms.
• Locate the main water shut-off and consider a leak detection system.
• Make a home inventory using our free home inventory template.

After you move in

• Cancel renters insurance once homeowners coverage starts, after moving belongings.
• Update your auto policy with your new garaging address.
• Review life and disability insurance now that you have a mortgage. See our term vs. permanent life guide.
• Review coverage annually and after remodeling.

First-time homebuyer insurance checklist

• ☐ Get a preliminary quote before making an offer
• ☐ Check flood, wildfire and earthquake risk
• ☐ Ask the seller for the property's claims history
• ☐ Share inspection findings with your broker
• ☐ Confirm lender requirements
• ☐ Choose the right policy type and options
• ☐ Understand escrow and title insurance
• ☐ Bind coverage and send proof before closing
• ☐ Update auto, life and disability coverage

Contact Alishahi Insurance or call (877) 711-4545 as soon as you start house hunting.

Frequently asked questions

Alishahi Insurance · 439 N Canon Dr, Penthouse, Beverly Hills, CA 90210 · (877) 711-4545 · CA License #4348151. General information only. This isn't legal, tax or financial advice or a coverage determination. Coverage depends on policy language and underwriting, and rules vary by state.