Your home is a huge investment that contains all your worldly possessions. The premiums for coverage are a small price to pay for the protections they provide.

The cost of homeowner’s insurance varies depending upon your location, type of coverage, any discounts you might qualify for and your provider. But as an extremely rough estimate, you can expect to pay in the neighborhood of $35 per month for each $100,000 of coverage.

Items to provide at closing: 

  • Provide proof of at least 12 month’s worth of insurance premiums to your closing.
  • Your policy’s declarations page with the effective date and the cost for a year’s coverage
  • Bring a receipt or a letter showing you’ve paid the bill.

After that, your lender will set up an escrow account and pay your monthly premiums out of that. Your homeowner’s insurance will just be rolled into your house payment, along with taxes. Since you’ve already paid for a year upfront, some home buyers assume their first year’s payments will be reduced. But from the first payment forward, your lender will be collecting insurance premiums to pay next year’s bill.

To satisfy your mortgage lender, you need to cover the home for current market value. All they care about is that they get their loan repayment even if the house and its contents burn to the ground. Except in some very rare circumstances, that’s not enough.