insurance For The First Time Home Buyer

Insurance For the First Time Home Buyer (Everything you need to know)

If you’ve found this page, chances are you’re at that point in life where you’re taking a big step. Good for you!

Buying your first home is an exciting milestone in life. Sometimes a stressful experience, it’s important to feel empowered in your purchasing decisions. Homeowner’s insurance may seem like another daunting task, but with a good insurance agent, it’s not. They should create ease for you throughout the process. When it comes to making the biggest purchase of your life, many questions arise so we’re here to clear up any confusion.

In order to de-mystify, on this page, you’ll find an infographic, insurance policy definitions, and the FAQs of many prospective home buyers out there. Based in Peabody/Danvers, MA, at Phil Richard Insurance, we’re here as an independent resource for you. If you have any questions, please don’t hesitate to reach out.

First Time Home Buyer Insurance Key Facts

Why do you need homeowner’s insurance?

To protect your assets and future income

Homeowners insurance can cover the structure of your home, detached structures, personal property,  and protect you from liability exposures, such as injuries occurring on your property.

To start, you’ll either obtain a homeowners policy (HO3), or a condo unit owners policy (HO6) from an insurance agent. Your coverage is based on how much it would cost to replace or repair damaged property, and what kinds of risks are considered to be exposed. Each individual is unique, which is why insurance companies create additional coverages, known as endorsements, to customize the coverage to your individual needs. The needs of the area you live in are unique as well, so make sure to work with someone local.

To satisfy your mortgage lender at closing

Your mortgage lender will require you to have a binder reflecting the mortgage clause and adequate HO insurance coverage paid in full.

Is homeowners insurance required?

If you have a loan on your home, your lender will require you to have insurance.

Do I need flood insurance?

If your lender requires it, yes. It’s always recommended, and if it’s not required, you may still want it, depending on where you live. We can help you determine the true need if that’s your situation.

What kind of insurance do you need if you are buying a condo?

Master Policy (for the association – the shell of the building, common areas)

Each Condo Association’s Master Policy is different, your agent will analyze it for you and address your needs.

HO-6 policy (inside your unit)

Your condo policy will reference the coverage in your master policy. Sometimes terminology is referred to as “walls-in” or “studs-in” coverage, the needs of these policies depend on the condo association’s master insurance policy.

Meaning the interior of your unit, personal belongs/contents.

What do I need for insurance on closing?

In order for closing to go smoothly, you need to have a homeowners insurance policy. It must be paid in full directly to your agent before closing. From there, your agent provides a binder (proof) to your mortgage company showing all of the requirements have been fulfilled in time.

If your mortgage payments are in escrow, you still need to pay the premium in full for the first year before closing. Escrow payments will kick in for renewal.

What happens to my escrow insurance payments when my mortgage is sold?

Inform your agent as soon as possible. They’ll need to update your policy as well as their records. If you don’t, you run the risk of your insurance payments getting missed and your policy canceled, meaning no insurance coverage.


Can I obtain homeowners insurance online with a national carrier?

Yes, proceed with caution – issues can arise. We’ve seen situations more than once when clients have obtained insurance with a national online company, only to have something wrong with the policy, and the closing held up as a result. By the time they come to us, closing has been pushed back, and money wasted. Not to mention, they are frustrated and confused.

With a local, independent agency, they have multiple companies/carriers to quote your home with and more “authority,” meaning, you don’t go through as much red tape. Prices can be more competitive, especially with combined home & auto policies. More importantly, you are getting the advice you trust, and smooth sailing for the most important purchase of your life. Having the wrong coverage is like lighting money on fire – it won’t work for you when you need it.

Is it worth it to quote my car insurance with the homeowners?

Yes! If you don’t, you are missing out on a 99% guaranteed savings. This goes for any agent, anywhere – it’s almost always better to bundle policies. Companies want all of your insurance coverage under one roof and will incentivize you for it. Think it’s too much of a hassle to get both quotes at the same time? We always say, “if you don’t do it right the first time, when are you going to do it again?” You’re spending lots of money, so to truly maximize the value of your insurance coverage and cost, quote both policies together. Take advantage of any savings you can while it’s fresh on your mind.

I already purchased my first home and have insurance, but I suspect I may be underinsured and/or I want to switch agencies. Is it too late?

No, not at all. It’s never too late to add more coverage on to your existing policy (unless it’s flood insurance!), and you can switch insurance agents and carriers at any time (although, there are times it’s better to wait – check with your new agent and see what they say). If you move both policies, you may not need a down payment for either. If you want to switch your car insurance mid-term, you may have to pay a minimal short-rate fee.

I heard it costs more to work with an independent insurance agency, is that true?

No, definitely not! We hear this common misconception frequently. Working with agents like us is like choosing your local farmer’s market over Walmart. Often, we are saving our clients money upfront, empowering them as consumers with holistic options, and not to mention, a commitment to the community. Independent agents have no board of directors, hidden fees, or rate increases after 6 months.

The main thing that separates us independent agents and national insurance companies is their large, creative marketing budgets!

Down the road, when they have a loss, our clients are especially grateful to have a local team supporting them. Insurance is serious business – your policy is a legally binding contract – make sure it’s with a local professional you know and trust.


How do I find a good independent insurance agent?

  • Support your local community and receive better service with a local agent (no it doesn’t cost more!).

  • Direct, national writers have good rates at first, but fewer options, lower coverage, and less clout in the case of a claim.

  • Ask for personal recommendations from your realtor, lawyer, banker, family & friends.

  • Google insurance in your area, read the reviews and find someone you feel comfortable with.

Frequently Asked Questions

What is the difference between Replacement Cost and Actual Cash Value (ACV)?
Replacement cost is typically required by lenders, it covers the cost for getting a good of the same quality and kind. Actual cash value considers wear and tear. It pays for your loss but often doesn’t pay enough to cover the replacement cost.
What is an endorsement?
Endorsements are the backbone of your policy, they allow you to increase or add coverage. Often, the additional coverage saves you from a large out-of-pocket expense in the case of a claim. Ultimately, they customize coverage. There are many packages out there to fit your specific needs
How do I get the most inexpensive homeowners policy?
The key here is to maximize value.

  • Bundle your auto & home policies = larger savings
  • Higher deductible = lower premium
Why do I have a deductible?
To prevent the filing small claims. If you have a $500 deductible, the damage will need to exceed $500 in order for your policy to kick in. Same goes for a $1,000 deductible and so on.
What if my dog is on the "no-dog" list?
Some carriers are stricter than others, but if no insurance company will take your adorable pooch, we can place you in the Massachusetts FAIR plan.
How does payment work for insurance if my loan is in escrow?
Your agent will collect payment in full from you for the first year and submit a binder confirming payment to your mortgage company. On your renewal, if your acccount is in escrow, your mortgage will pay it on your behalf. IF your mortgage is sold, alert your insurance agent as soon as possible.
Do I need an umbrella?
We say anyone with assets to protect or future earnings to protect should consider an umbrella policy.
Should I have a flood policy if I'm not in a flood zone?
We recommend you highly consider it as flood policies are relatively inexpensive (when not required), and covers your home for exposures your homeowner’s insurance policy does not.
Should I keep an inventory of my personal belongings?
We always recommend our clients keep track of what they own. In the case of a loss, the more receipts, appraisals, etc, the better. Home inventory apps such as Sortly can help you keep track.
First Time Home Buyer Insurance Service Area
Phil Richard Insurance, located in Danvers, MA, offers Insurance services to indviduals and businesses in the North Shore of Massachusetts including but not limited to Danvers, Peabody, Beverly, Salem, Newburyport, Ipswich, Rockport, Gloucester, Marblehead, Swampscott, Amesbury, Georgetown, Lynnfield, Middleton, Hamilton, Wenham, Greater Boston Area, and more. We also serve New Hampshire, Connecticut, and Maine.

Make sure you have the right amount and combination of coverage

Get A Quote

At Phil Richard Insurance, we don’t believe in wasted time or money. If you’re here, you’re looking for savings, advice, and options. We provide all three. Please fill out the form below and someone will be in touch with you shortly.

Get A Quote
Address *
Street Name

Home Insurance Policy Definitions

Dwelling Limit
Can pay for damage to your house and to structures attached to your house.
Other Structures
Can pay for damage to structures not attached to your house.
Personal Property
Reimburses you for the value of your possessions (depending on your coverage).
Loss of Use
Can pay for living expenses while your home is being repaired.
Personal Liability
Can cover financial loss if you are found legally responsible for injuries or damages to someone else.
Medical Payments
Can pay medical bills for people hurt on your property.




27 Garden Street

Unit 1B
Danvers, MA 01923




Office Hours

Monday: 9am – 4:30pm

Tuesday: 9am – 4:30pm

Wednesday: 9am – 4:30pm

Thursday: 9am – 4:30pm

Friday: 9am – 4:30pm

Sat – Sun: Closed




peabody area chamber of commerce
home insurance peabody ma
business insurance peabody ma