Many homebuyers focus on finding the right property, securing a mortgage, and preparing for closing. One important step that often receives less attention is homeowners insurance.
While your lender will generally require insurance before closing if you’re financing the purchase, understanding how homeowners insurance works before you’re under contract can make the buying process smoother.
If you’re purchasing a home in Rockville, Gaithersburg, Bethesda, Potomac, Silver Spring, Frederick, or elsewhere in Maryland, knowing what homeowners insurance typically covers—and what it may not—can help you make informed decisions.
Jeremy Rosenthal, REALTOR®, serves buyers throughout Maryland, Virginia, and Washington, DC and encourages clients to plan for insurance early in the transaction rather than waiting until the final days before settlement.
What Is Homeowners Insurance?
Homeowners insurance is a policy designed to help protect a homeowner financially against certain covered events affecting the property.
Policies vary, but they commonly include protection for:
- The home’s structure
- Detached structures
- Personal belongings
- Personal liability
- Additional living expenses after certain covered losses
Coverage depends on the specific policy, deductible, and insurer.
Why Do Mortgage Lenders Require It?
Most lenders require proof of homeowners insurance before funding a mortgage loan.
This protects the lender’s financial interest in the property while also helping homeowners prepare for unexpected covered losses.
Without proof of insurance, closing may be delayed until coverage is in place.
What Does Homeowners Insurance Typically Cover?
Although every policy differs, common coverage categories include:
Dwelling Coverage
Helps protect the home’s physical structure against covered events.
Personal Property
May provide coverage for furniture, clothing, electronics, and other personal belongings, subject to policy limits.
Liability Protection
May help cover certain legal or medical expenses if someone is injured on the property under covered circumstances.
Loss of Use
If a covered event makes the home temporarily uninhabitable, some policies provide coverage for additional living expenses.
What Is Usually Not Covered?
Buyers are sometimes surprised to learn that standard policies often exclude certain risks.
Examples may include:
- Flood damage
- Earth movement
- Routine wear and tear
- Deferred maintenance
- Pest damage
Depending on the property’s location and characteristics, separate policies or endorsements may be appropriate.
Factors That Can Affect Insurance Premiums
Insurance costs vary from property to property.
Common factors include:
- Home age
- Construction materials
- Roof condition
- Property location
- Claims history
- Coverage limits
- Deductible amount
Obtaining multiple quotes can help buyers compare available options.
When Should Buyers Shop for Insurance?
Many buyers wait until the final week before closing.
Instead, consider requesting quotes shortly after your purchase contract is accepted.
This provides time to:
- Compare insurers
- Review coverage options
- Ask questions
- Avoid last-minute delays
Homeowners Insurance and Escrow
If your mortgage includes an escrow account, the lender may collect part of your annual homeowners insurance premium as part of your monthly mortgage payment.
Your lender will explain how escrow applies to your loan.
Frequently Asked Questions
Is homeowners insurance required?
Cash buyers may not be required to carry homeowners insurance, but mortgage lenders typically require it before closing.
Can I choose my own insurance company?
Yes. Buyers generally have the option to compare insurers and select the policy that best meets their needs.
Does homeowners insurance cover maintenance?
No. Routine maintenance and normal wear are generally the homeowner’s responsibility.
Should I compare multiple quotes?
Many buyers choose to compare quotes from different insurance providers to better understand available coverage options and pricing.
Key Takeaways
Before closing on a home:
- Start shopping for insurance early.
- Compare more than one policy.
- Understand what is and isn’t covered.
- Ask questions about deductibles and exclusions.
- Budget for insurance as part of your monthly homeownership costs.
Planning ahead can help make your closing process more efficient and reduce last-minute surprises.
Work With Jeremy Rosenthal
Jeremy Rosenthal is a REALTOR® serving buyers and sellers throughout Maryland, Virginia, and Washington, DC. Whether you’re buying your first home, relocating, or preparing to sell, Jeremy provides guidance to help clients understand every stage of the real estate process—from preparing an offer to closing day. If you’re considering buying or selling in Rockville, Gaithersburg, Bethesda, Montgomery County, Northern Virginia, or Washington, DC, Jeremy is available to help you navigate current market conditions and make informed real estate decisions.
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