Buying a New Home? 5 Insurance Mistakes to Avoid During the Closing Process
Finding your dream home, getting your offer accepted, and surviving the mortgage underwriting process is an incredible milestone. But as you enter the home stretch—the closing process—there is still one critical piece of the puzzle that can delay your keys or cost you thousands if handled incorrectly: your homeowners insurance.
At JC Insurance Collective, we see homebuyers fall into the same insurance traps right before closing. To ensure your transition into your new home is as smooth as possible, avoid these five common insurance mistakes.
1. Waiting Until the Week of Closing to Get a Quote
Many buyers treat home insurance as a last-minute checklist item to satisfy their lender. However, rushing the process can backfire. If the home has an undisclosed claim history, or if it sits in a high-risk flood or wildfire zone, finding affordable coverage can take time. Waiting until the final days can delay your closing date, risking your interest rate lock.
The Safe Timeline: Start shopping for your insurance policy as soon as your home inspection is complete.
2. Assuming the Premium Matches the Online Estimate
When you received your initial mortgage pre-approval, your lender likely plugged in a generic estimate for your monthly homeowners insurance premium. Relying on that placeholder can distort your debt-to-income (DTI) ratio. If the actual premium comes back significantly higher due to the home's age, roof condition, or location, it could disrupt your loan's final approval. Always get a real, localized quote early.
3. Underinsuring the Home to Lower the Monthly Payment
It is tempting to look for ways to trim your monthly escrow payment, but cutting corners on your dwelling coverage is a dangerous gamble. Your policy should cover the reconstruction cost of the home (what it actually costs to rebuild it today with modern labor and material prices), not its real estate market value. If you insure the home only for the loan amount or the purchase price, you could be left with a massive financial gap if a total loss occurs.
4. Overlooking the Roof's Age and History
In the insurance world, the roof is the most critical part of the house. If a home has a roof that is over 15 to 20 years old, many insurance carriers will either decline to write a policy entirely, exclude wind/hail damage, or require a higher deductible. Before you sign the closing papers, make sure you know the exact age of the roof and how it impacts your policy terms.
5. Skipping Essential Optional Endorsements
A standard home insurance policy covers a lot, but it doesn't cover everything. Many first-time buyers mistakenly assume that things like water backup (when a sump pump fails or a sewer lines backs up into the home) or local flooding are automatically included. They aren't. Skipping these affordable, optional coverages can leave you paying out-of-pocket for thousands of dollars in damages down the road.
Let's Cross the Finish Line Together Don't let insurance hurdles stall your home purchase. Contact JC Insurance Collective today, and our team will help you navigate the closing process with a policy tailored perfectly to your new home.