Why an insurance checklist matters
Buying a home is usually the largest single purchase most people make. Insurance turns a costly, unexpected loss into an isolated financial event instead of a long-term disaster. Over 15 years advising homeowners, I’ve seen two consistent patterns: well-structured coverage prevents financial ruin after an event, and documentation + simple annual reviews prevent coverage surprises when you file a claim.
This checklist focuses on the most common and highest-impact policies new homeowners should consider, how to choose limits and deductibles, and practical steps to shop and document your coverage. It’s educational content, not legal or insurance advice—consult a licensed agent for personalized recommendations.
Sources: Consumer Financial Protection Bureau (CFPB) for consumer guidance, and FEMA/NFIP for flood insurance specifics (see links below).
Quick checklist (one-page view)
- Primary homeowner’s policy (HO-3 or state equivalent): dwelling, other structures, personal property, liability, additional living expenses
- Flood insurance (NFIP or private) if you’re in a flood zone or want protection from surface water
- Earthquake insurance where seismic risk exists
- Umbrella liability policy to add large personal liability limits
- Title insurance at closing (owner’s title policy)
- Landlord or dwelling fire policy for rental properties
- Endorsements/riders: scheduled personal property, water backup, sewer, ordinance & law, identity theft
- Document inventory + receipts and store offsite
- Annual policy review and replacement-cost update
Detailed items on the checklist
1) Homeowner’s insurance (the foundation)
What it covers: A standard homeowner’s policy (commonly an HO-3 in many states) protects the dwelling (structure), other structures (garage, fence), personal property (furniture, electronics), personal liability, and Additional Living Expenses (ALE) if you must temporarily relocate while your home is repaired.
Key decisions:
- Replacement cost vs. actual cash value (ACV): replacement-cost coverage pays to replace items or rebuild without depreciation; ACV deducts depreciation. For dwellings, replacement cost is usually recommended.
- Dwelling limit: set at the estimated cost to rebuild your home, not the market value. Use a local builder’s estimate or ask your agent for a dwelling replacement-cost estimate.
- Liability limit: baseline often $100k–$300k; many homeowners choose $1M or higher and layer with an umbrella policy.
Why it’s required: Most mortgage lenders require a homeowner’s policy that protects the lender’s interest in the property.
Further reading: See our in-depth article on Homeowners Insurance.
2) Flood insurance
Why it matters: Standard homeowner policies typically exclude flood (surface water, storm surge). Flood damage can be catastrophic and expensive.
Options: National Flood Insurance Program (NFIP) through FEMA, or private flood policies. Even if you are outside a designated high-risk zone, consider flood insurance—many flood claims come from moderate- to low-risk areas.
Action steps:
- Check FEMA flood maps for your property and get an NFIP quote if in or near a floodplain.
- Compare private market pricing and coverages—private carriers sometimes offer higher limits or broader coverages.
Source: FEMA/NFIP flood insurance guidance.
3) Earthquake insurance
Who needs it: Homeowners in seismic zones (California, parts of the Intermountain West, Pacific Northwest) should evaluate earthquake policies. Standard homeowner’s policies rarely cover earthquake damage.
Considerations: Earthquake policies often have separate deductibles (percentage of dwelling limit) and specific coverages for seismic-related damage.
4) Umbrella liability insurance
Purpose: Extends liability protection beyond homeowner’s and auto policy limits. A $1M umbrella policy is commonly inexpensive relative to value and provides broad protection for lawsuits, rental incidents, and serious injuries.
When to buy: If you have significant assets, a high-income trajectory, or exposure to frequent guests or rental activity, umbrella insurance is important.
Further reading: Umbrella Liability Insurance Explained.
5) Title insurance
Why it matters: Title insurance (owner’s policy) protects against past liens, undisclosed heirs, or errors in public records that could challenge ownership. It’s a one-time fee often paid at closing.
Tip: Review the preliminary title report carefully before closing and keep your owner’s title policy safe.
6) Landlord insurance
If you plan to rent part or all of your property, convert your personal homeowner’s policy to landlord coverage or buy a dwelling fire policy designed for rental properties. Personal homeowner’s policies often exclude liability and property losses tied to rental activity.
7) Additional endorsements and riders
Common endorsements to consider:
- Scheduled personal property (for high-value jewelry, art, cameras) — provides agreed value coverage
- Water backup/sewer endorsement — covers damage from sewage or sump pump failures
- Ordinance and law coverage — pays higher costs to rebuild to current code
- Identity theft protection and credit-monitoring services (some insurers offer riders)
8) Personal property inventory and documentation
Create a room-by-room inventory with photos, serial numbers, purchase receipts, and approximate replacement costs. Store copies offsite or in cloud storage. This speeds claims and avoids disputes over value.
9) Deductibles and cost trade-offs
- Higher deductibles lower premiums but increase out-of-pocket if you claim.
- Consider keeping deductibles for smaller events and paying out of pocket for very small claims to avoid premium increases.
10) Mortgage, escrow, and lender requirements
Mortgage lenders typically require proof of insurance and may require you to maintain hazard insurance with the lender listed as loss payee. If your escrow holds payments for insurance, reconcile annually to confirm the carrier and limits match your policy.
Related: how escrow works—see How Mortgage Escrow Accounts Work.
How to shop and compare policies (practical steps)
- Gather property information: square footage, year built, upgrades, roof age, foundation type, recent appraisals or contractor rebuild estimates.
- Get at least three written quotes from different carriers—include top national carriers, regional insurers, and independent agents.
- Compare not only premium but: dwelling limits, deductible structure, liability limits, exclusions, endorsements available, claim-paying reputation, and discounts.
- Ask about bundling discounts (home + auto) and claims-free discounts.
- Read the policy declarations page and exclusions section carefully before buying.
CFPB guidance emphasizes shopping multiple carriers and reading policy terms—see Consumer Financial Protection Bureau materials for consumer protections.
Common mistakes new homeowners make
- Assuming a standard policy covers floods, earthquakes, or sewer backups.
- Insuring to market value instead of replacement cost for dwelling limits.
- Failing to schedule high-value personal items.
- Letting coverage lapse due to missed payments or not updating agent after home improvements.
- Not keeping an up-to-date home inventory.
Real-world examples (lessons learned)
- A renovated bungalow suffered basement flooding after heavy rain. The family had no flood insurance and faced six figures in cleanup and mold remediation. With flood coverage, most cleanup and replacement would have been covered.
- A homeowner with a small rental unit used a standard homeowner’s policy and discovered his liability was limited when a tenant slipped and sued. Landlord coverage and an umbrella policy would have prevented an uncovered legal exposure.
These are representative examples based on client cases I’ve handled; outcomes vary by policy language and state law.
Annual review checklist (practical)
- Update dwelling replacement-cost estimate after improvements
- Add or remove scheduled items
- Re-check flood map and consider flood policy if maps changed
- Confirm discounts still apply (e.g., security system)
- Review coverage limits as net worth or rental activity changes
FAQs (brief)
- How much liability coverage do I need? Typically start at $300k–$500k; many buyers choose $1M and add umbrella coverage depending on assets and risk.
- Does homeowners insurance cover loss of use? Yes—Additional Living Expenses (ALE) cover reasonable housing and living costs while your home is repaired.
- Will a claims history raise my premiums? Frequent or large claims can increase premiums; weigh small claims vs. deductible choices.
Final tips and next steps
- Start with a homeowner’s policy that provides replacement-cost dwelling coverage and sufficient liability limits.
- Add flood or earthquake insurance where relevant—don’t assume standard policies cover those perils.
- Use a documented inventory and store backups offsite.
- Shop multiple carriers and ask about bundling and multi-policy discounts.
- Schedule an annual policy review or after major home improvements.
This checklist is educational only. Contact a licensed insurance agent or broker and review carrier policy language for a recommendation tailored to your property and state.
Authoritative sources
- Consumer Financial Protection Bureau — home insurance consumer guidance: https://www.consumerfinance.gov
- FEMA/NFIP — flood insurance and flood maps: https://www.fema.gov/national-flood-insurance-program
Internal resources
- FinHelp: Homeowners Insurance — https://finhelp.io/glossary/homeowners-insurance/
- FinHelp: Umbrella Liability Insurance Explained — https://finhelp.io/glossary/umbrella-liability-insurance-explained/
- FinHelp: How to Review Insurance Policies — https://finhelp.io/glossary/how-to-review-insurance-policies-a-checklist-for-consumers/
Professional disclaimer: This article is educational and based on general experience. It is not insurance, legal, or tax advice. For advice tailored to your situation, consult a licensed insurance professional.
