Lenders require homeowners insurance before closing, covering at least the cost to rebuild the home. A standard policy covers the structure, your belongings and liability for injuries, but not floods or earthquakes, which need separate policies. Premiums vary widely by location and have risen fast in high-risk areas, so get quotes early, ideally during your inspection period.
What a standard policy covers
- Dwelling: the cost to repair or rebuild the house.
- Other structures: detached garages, fences, sheds.
- Personal property: your belongings, often with limits on jewelry and electronics.
- Loss of use: living costs if you can’t stay in the home after a covered loss.
- Liability: injuries to others on your property.
What it usually doesn’t cover
- Flood: requires a separate policy, through the National Flood Insurance Program or a private insurer. Required by lenders in high-risk flood zones.
- Earthquake: separate coverage.
- Wear and tear, maintenance problems, and pest damage.
- Sewer backup: often an inexpensive add-on.
What drives your premium
Location and natural hazard risk matter most: wildfire, hurricane, hail and wind risk can multiply premiums. The roof’s age and material, the home’s age, your claims history, credit-based insurance scores in most states, and your deductible matter too.
See: Lowest natural hazard riskZIP codes where flooding, wildfire, storms and other hazards cost the least, a good proxy for where insurance is easier to get.Shopping for a policy
- Get at least three quotes, including an independent agent who works with several insurers.
- Compare the same coverage amounts and deductibles.
- Ask about replacement cost vs. actual cash value for belongings.
- Ask about discounts for bundling, new roofs, security systems and storm protection.
- Check the insurer’s financial strength and claims reputation.
How you’ll pay
You usually pay the first year’s premium at or before closing, and then your lender collects it monthly through escrow. See how insurance affects your payment with the mortgage payment calculator, and your first-year costs with the true cost to buy.
Get quotes before your contingency ends
In some areas, insurers aren’t writing new policies, or quotes are far higher than expected. Getting quotes during your inspection period leaves time to renegotiate or walk away; see natural disaster risk when buying.
Common questions
Is homeowners insurance required?
Lenders require it before closing, covering at least the cost to rebuild. Flood insurance is also required in high-risk flood zones.
Does homeowners insurance cover floods?
No. Flood coverage requires a separate policy from the National Flood Insurance Program or a private insurer.
When should I shop for homeowners insurance?
As soon as you’re under contract, ideally during your inspection period, in case quotes are high or hard to get.
Updated October 2026. Educational content. OfferBacked is not currently a lender and doesn’t issue pre-approvals or loans.