Best homeowners insurance for first-time buyers

What is Homeowners Insurance?

Homeowners insurance is a policy that protects your home and personal belongings against damage or loss caused by disasters like fire, theft, storms, or vandalism. It also provides liability coverage if someone gets hurt on your property.

Most mortgage lenders require homeowners insurance as a condition of the loan. So if you’re buying a house with a mortgage, you’ll need to purchase a policy before closing.

What Does a Standard Homeowners Insurance Policy Cover?

A standard homeowners insurance policy, often referred to as an HO-3 policy, includes:

1. Dwelling Coverage

• Pays to repair or rebuild your home’s structure after damage from covered perils (like fire, wind, or hail).

2. Other Structures Coverage

• Covers detached structures like garages, fences, and sheds (typically 10% of your dwelling coverage).

3. Personal Property Coverage

• Covers your belongings (furniture, clothes, electronics) if they are damaged, destroyed, or stolen.

4. Loss of Use (ALE)

• Pays for hotel stays or other living expenses if your home is uninhabitable due to a covered event.

5. Liability Protection

• Covers legal expenses if someone sues you for injury or property damage that occurred on your property.

6. Medical Payments

• Covers minor medical costs for guests injured on your property, regardless of fault.

 How Much Does Homeowners Insurance Cost for First-Time Buyers?

The average annual homeowners insurance premium in the U.S. in 2025 ranges from $1,200 to $2,000 depending on several factors:

Tip: As a first-time buyer, use online quote comparison tools to shop around before committing.

 Best Homeowners Insurance Providers for First-Time Buyers in 2025

Here are the top insurance companies offering the best value, customer service, and coverage options for first-time homeowners:

1. State Farm – Best Overall for First-Time Buyers

Why it’s great:

• Largest home insurer in the U.S.

• Extensive agent network for in-person help

• Competitive pricing with bundling options (auto + home)

• User-friendly mobile app and online tools

Highlights:

• Dwelling coverage with inflation protection

• Option to add replacement cost coverage for personal belongings

• Excellent claims satisfaction score

2. Lemonade – Best for Tech-Savvy Buyers

Why it’s great:

• Digital-first insurer with AI-powered app

• Quick quotes and instant coverage

• Transparent policies and fast claims handling

Highlights:

• Affordable policies starting around $25/month

• Charity giveback model

• Customize coverage with optional add-ons

Best for: Millennials and Gen Z buyers comfortable with app-based services.

3. Allstate – Best for Discounts

Why it’s great:

• Large variety of discount options

• Easy to bundle with other types of insurance

• Local agents and strong financial backing

Discounts Available:

• Multi-policy

• First-time homebuyer

• Auto-pay and paperless billing

• Home safety upgrades (alarm systems, storm shutters)

4. USAA – Best for Military Families

Why it’s great:

• Only available to military members, veterans, and their families

• Excellent customer service and claims satisfaction

• Replacement cost coverage included by default

Highlights:

• Comprehensive coverage at competitive rates

• Offers flood and earthquake endorsements

Note: You must be eligible based on military affiliation.

5. Nationwide – Best for Customizable Coverage

Why it’s great:

• Offers a wide range of endorsements

• Superior coverage options like Brand New Belongings® and Better Roof Replacement®

• Available in most states

Highlights:

• Identity theft protection add-on

• Optional water backup coverage

• Strong financial stability

6. Progressive – Best for Bundling

Why it’s great:

• Competitive rates when bundled with auto insurance

• Works with partner insurers for tailored options

• User-friendly website for managing policies

Highlights:

• Name Your Price tool

• SmartHome discount if you install smart security devices

 What First-Time Buyers Should Look for in a Homeowners Insurance Policy

As a first-time homebuyer, consider the following when choosing a policy:

 Coverage Amounts

• Make sure the dwelling coverage is enough to rebuild your home — not just the purchase price.

• Don’t underinsure your personal belongings. Use a home inventory checklist.

 Deductible Options

• Higher deductibles reduce premiums, but be sure you can afford them if disaster strikes.

 Replacement Cost vs. Actual Cash Value

• Replacement cost pays to replace items with new ones (better).

• Actual cash value deducts for depreciation.

 Exclusions & Add-ons

• Understand what’s not covered (floods, earthquakes).

• Consider riders for high-value items (jewelry, electronics, art).

• Add water backup and identity theft protection if needed.

 Customer Service and Claims

• Read reviews and check J.D. Power scores for claims satisfaction.

• Choose a provider with strong customer support, especially if you’re new to insurance.

 Tips for First-Time Buyers to Save on Homeowners Insurance

1. Bundle with Auto: Get up to 20–30% off when bundling policies.

2. Raise Your Deductible: Going from $500 to $1,000 can cut your premium.

3. Install Safety Features: Smoke alarms, deadbolts, and smart sensors qualify for discounts.

4. Maintain Good Credit: Your credit score affects your rate.

5. Compare Quotes: Use tools like Policygenius, The Zebra, or Lemonade’s app to find the best deal.

6. Ask for First-Time Buyer Discounts: Some insurers specifically reward new homeowners.

 Frequently Asked Questions

Q: Is homeowners insurance required?

A: Yes, if you have a mortgage, your lender will require insurance to protect their investment.

Q: Does it cover flooding or earthquakes?

A: No, not by default. You’ll need separate flood or earthquake insurance depending on your location.

Q: Can I switch insurance after closing?

A: Yes. You’re not locked in. You can switch providers any time — just notify your lender.

Buying your first home is a major investment, and the right homeowners insurance policy gives you peace of mind and financial protection. The best insurer for you depends on your budget, location, home type, and preferences — whether you want a tech-friendly solution like Lemonade, or a reliable name like State Farm or Allstate.

Take the time to understand your coverage needs, compare quotes, and ask questions before choosing your provider. With the right policy in place, you’ll be better prepared for whatever life throws at your new home.