Buying a home? When to line up insurance before closing

Homeowners insurance is one of the last items on a closing checklist, but it shouldn’t be one of the last things you start. In California, some homes are harder to insure than others, and your lender won’t fund the loan without proof of coverage.

Start as soon as you’re in contract

Get a quote during your contract’s investigation period, the window your purchase agreement gives you to inspect the property and review its condition. Ask your real estate agent for your exact deadline. If the home is in a high wildfire area, has an older roof, or has older electrical or plumbing, you want to know what coverage costs, and whether it’s available, before you remove contingencies.

To quote, we’ll need the property address, your expected closing date, and basic details like year built, square footage, and any updates to the roof, electrical, plumbing or heating. Your inspection report helps too.

What your lender needs

• Evidence of insurance. Usually a binder or declarations page that shows the coverage, the policy dates, and your lender listed as mortgagee with your loan number.
• Enough dwelling coverage. Lenders look at the cost to rebuild the home (replacement cost), which is different from the purchase price.
• The premium amount. Most lenders collect the first year’s premium at or before closing, and many set up an impound (escrow) account to pay renewals.

The premium also appears on your Closing Disclosure, which you must receive at least three business days before you sign. If insurance isn’t finished, the Closing Disclosure can’t go out on time, and that can push your closing date.

A simple timeline

1. When escrow opens: Send us the address, closing date, and your lender and escrow contacts.
2. During your investigation period: Review quotes and coverage options, and flag any insurability issues early.
3. About 2 to 3 weeks before closing: Choose a policy and bind it, effective on your closing date. We send proof of insurance to your lender and escrow.
4. If your closing date moves: Tell us so we can update the policy’s start date.

Buying a condo?

Condo owners usually need an HO-6 policy for the interior of the unit, belongings and liability. How much interior coverage you need depends on the HOA’s master policy, so ask the HOA or escrow for a copy early. Some lenders also ask for proof of the HOA’s master policy.

Hard-to-insure home?

If standard companies won’t cover the property, the California FAIR Plan plus a Difference in Conditions policy may be the answer. Check with your lender early to confirm they’ll accept that setup. Read how FAIR Plan and DIC coverage work together.

We work with lenders and escrow every day

Send us your file details and we’ll coordinate proof of insurance with everyone on your transaction. Get a quote or call (949) 525-0570. Lenders and escrow officers can also use our Lenders & Escrow page.

This article is general information. Your lender’s requirements and your purchase contract control your specific deadlines.