Home Insurance: What Buyers Need to Know Before Closing

When you’re buying a home, insurance is the part everybody rushes through. You glance at the price and move on. That’s exactly where buyers get into trouble.

I sat down with Cody Harding, an agency owner with Goosehead Insurance, to walk through what actually matters when insuring a home.

The process gets a lot less intimidating once you see it laid out step by step.

Price is a fraction of the whole policy. When you compare two policies on cost alone, you’re assuming they cover the same things, and they almost never do. Insurance policies are highly customizable, so there are countless ways to make one look cheaper by quietly excluding coverage.

The lower number often isn’t a better deal. It’s a thinner policy. What you want is someone who walks you through the coverage line by line and flags the blind spots, rather than emailing a quote and telling you to look it over yourself.

Bundling isn’t automatically the answer. You’ve heard “bundle and save” so many times that it sounds like law, but bundling is mostly what insurance companies want, because it hands them all your business. The smarter move is to add up the real cost and find the best combination, whether that’s home and auto with one carrier or a different company for each.

“The price of a policy is a fraction of the whole policy.”

The coverage most people assume they have, they don’t. Water backup is the big one. Anytime water comes up through a drain rather than going down it,that's not covered under a standard home policy unless you add a specific endorsement. If you have a finished basement, Cody recommends at least $10,000 of water backup coverage, and in Michigan, this comes up all the time.

Flood is separate and has a specific meaning. In insurance terms, flooding is water coming in from outside, a river overtaking your house, or rainwater accumulating where it’s normally dry.A standard homeowners policy doesn't cover it. Everyone is technically in a floodplain; the only question is whether you’re low- or high-risk. High-risk buyers are usually required by their mortgage company to carry flood insurance, but even lower-risk homeowners can buy a policy.

Read the deductible before you sign. Some national policies set the wind and hail deductible at 2% or 3% of your dwelling coverage rather than a flat dollar amount, and that math surprises people. Cody has seen an $18,000 wind and hail deductible, at which point you’re essentially self-insuring. Make it a number you could actually cover out of an emergency fund.

Your rate isn’t locked for good. The premium can rise at renewal even when you’ve never filed a claim, because insurers spread their risk geographically and charge more in higher-risk areas. Past claims also follow the house, not just the owner, so a home with a history of water claims can cost the next buyer more.

Two questions tell you if a loss is covered.

• Did it happen suddenly?
• Did it happen accidentally?

If both are yes, it’s covered about 95% of the time. If a tree comes through your roof over the weekend, stop the damage first if you can, document everything with photos, and then start the claim when the offices open.

The through-line here runs through the whole series. The person matters as much as the product. A good agent will tell you when your current policy is already fine, and you should stay put, because their business runs on trust and referrals, not on selling you one more thing.

If you want people in your corner who operate this way, reach out. Call or text me at 517-204-3311, email me at Jeff@jeffburkeassociates.com, or visit michiganhomelife.com. And to reach Cody directly, he’s at 616-217-4719 or Goosehead Insurance.