When you're buying a home, there's a lot to think about—inspections, appraisals, closing costs—but one item that’s often rushed through is homeowners insurance. Don’t let it be an afterthought! The right policy not only protects your most valuable asset but also impacts your monthly mortgage payment.
Here’s what you need to know about choosing a policy, understanding what’s included, and how to make sure you’re getting the best rate and coverage.
What to Look for in a Homeowners Insurance Policy
When shopping for coverage, consider the following key components:
- Dwelling Coverage: This is the amount it would cost to rebuild your home if it were destroyed. Make sure this is based on current construction costs, not the price you paid for the home.
- Personal Property Coverage: Covers your belongings inside the home—furniture, electronics, clothing, etc.
- Liability Protection: Covers legal or medical costs if someone is injured on your property.
- Loss of Use (ALE – Additional Living Expenses): If your home becomes uninhabitable due to a covered claim, this pays for temporary living expenses.
- Deductibles: This is what you pay out of pocket before your policy kicks in. A higher deductible typically means a lower premium—but be sure it’s affordable in an emergency.
In Texas, many policies use a percentage-based deductible—typically 1%, 2%, or even 5% of your home’s insured value.
Let’s break that down with a real-world example If your home is insured for $300,000:
- A 1% deductible = $3,000 out of pocket
- A 2% deductible = $6,000 out of pocket
- A 5% deductible = $15,000 out of pocket
Now consider this: the average roof replacement in our area costs $15,000–$20,000. If you have a 5% deductible, you may be paying the full cost yourself—even with insurance.
Pro tip: Many homeowners are surprised at how much a “higher deductible” actually means in real dollars. Make sure you’re comfortable with the amount you’d be required to pay in the event of a claim—especially when it comes to big-ticket repairs like hail or wind damage to your roof. Here in Lubbock, TX most roofs are replaced every 10 to 15 years but could be more often.
Common Terms and What They Mean
- Replacement Cost vs. Actual Cash Value: Replacement cost pays to rebuild or replace without deducting for depreciation. Actual cash value factors in depreciation, meaning you get less back.
- Exclusions: Things your policy won’t cover—like flood or earthquake damage. Be sure to ask your agent what’s excluded.
- Endorsements/Riders: Add-ons to customize your policy—think high-value items like jewelry or home office equipment.
Why Insurance Rates Have Gone Up (And How It Affects Your Mortgage)
Homeowners insurance rates have jumped in recent years—and it's not just you. Rising material and labor costs, more frequent extreme weather events, and higher claim payouts have led to increasing premiums across the board.
Because insurance is part of your escrow account, when your premium goes up, so does your monthly mortgage payment. That’s why it’s important to regularly review your coverage.
Shop Your Policy Every 6 Months
Yes, even if you’re happy with your current carrier, it’s smart to shop your homeowners insurance every 6–12 months. Rates vary between providers, and loyalty doesn’t always pay off. You might find better coverage for a lower price—especially if your credit score, roof condition, or local risk factors have changed.
Homebuyer Tips to Save on Insurance
If you're under contract or about to close on a home, here are some smart ways to save:
- Check the Roof: Ask about the age, material, and class rating of the shingles. Class 4 impact-resistant shingles can qualify for discounts with some insurers.
- Make sure the roof warranty is transferable to you, the new owner. If you need help doing this you can contact The Lindsey Bartley Team. We have rescources that can help you.
- Security Features: Homes with monitored security systems, smart detectors, or deadbolt locks can qualify for discounts.
- Bundle & Save: Bundle your auto and homeowners policies with one carrier to get a multi-policy discount, but also price out individual policies. Sometimes you can save by bundeling-but not always.
- Higher Deductible: If you’re financially comfortable with a higher deductible, it can significantly lower your premium.
- Ask for a Claims History (CLUE Report): This tells you about past insurance claims made on the home, which could affect your rates—or help you negotiate repairs before closing.
Final Thoughts
Homeowners insurance isn’t just a checkbox—it’s a crucial part of protecting your investment. Taking the time to understand what you’re buying and how to optimize it can save you hundreds of dollars a year and a lot of headaches down the road.
Have questions about insurance or anything else homebuying-related? Give us a call at The Lindsey Bartley Team! We’d love to help you every step of the way.
