How Soon Do You Need to Get Homeowners Insurance After Buying a Home?

Homeowners insurance is essential for protecting your most significant investment: your home. But how soon after buying a house do you need to get it? The answer depends on whether you are financing the purchase or buying the home outright, but the best practice is to have homeowners insurance in place before the transaction is finalized.

When Financing a Home Purchase

If you’re taking out a mortgage to buy your home, your lender typically requires proof of homeowners insurance before closing the deal. Lenders mandate this because the property serves as collateral for the loan. Without insurance, they would have no recourse in damage or destruction.

Most lenders won’t let you proceed to closing without evidence of an active homeowners insurance policy. In many cases, you’ll be asked to provide proof—known as a binder or declarations page, which is a document from the insurance company that provides details about your policy, including the coverage and the start date. This start date should align with the closing date or be earlier. Some buyers even pay the first year’s premium as part of the escrow process.

For Cash Buyers

If you’re buying a home without a mortgage, there’s no legal requirement to obtain homeowners insurance. However, it’s unwise to delay. You’re financially vulnerable to fire, theft, or natural disasters without insurance. Ideally, you should secure adequate coverage on or before the closing date to avoid any gaps in protection.

Why Timing Matters

Having homeowners insurance in place at the right time ensures both you and your lender are protected from the moment the home legally becomes yours. Delaying can result in significant financial risks. For example, if a fire damages the property before your coverage begins, you could be left paying for repairs out of pocket. This is why it’s crucial to have your insurance in place before any potential risks arise.

Additionally, some policies, such as those covering flood or earthquake damage, may require a waiting period before taking effect. Planning early gives you time to tailor your coverage to your needs without rushing or settling for inadequate protection.

Steps to Secure Homeowners Insurance

1. Start Early: Research insurance providers as soon as your offer is accepted. Compare quotes to find the best coverage at the most affordable rate.
2. Work With Your Lender: Ensure your policy meets the lender’s requirements. This often includes specific coverage limits for dwelling, liability, and personal property.
3. Consider Add-Ons: Depending on your Oregon location, you may need additional coverage for floods, earthquakes, or high-value belongings.
4. Confirm Coverage Dates: Ensure the policy’s start date matches or precedes your closing date.
5. Provide Proof: Submit the required documentation to your lender or closing agent before the closing appointment.

Conclusion

Homeowner insurance isn’t just a recommendation for most homebuyers—it’s a requirement. Securing your policy early in the buying process provides peace of mind and ensures compliance with lender requirements. Even if you’re purchasing the property outright, delaying coverage exposes you to risks that could have life-changing financial consequences. Start planning when your offer is accepted to protect your home from day one, and enjoy the peace of mind that comes with being prepared.

To get an affordable homeowners insurance quote, contact us today by calling (514) 318-8835 or click here to connect with us online.