Buying Your First Home In The Philadelphia Area? Here’s The Insurance Checklist You Need

Whether you’re interested in a Fishtown rowhome or a colonial townhouse in the burbs, there’s a lot to think about when buying a home. Things like inspections, mortgage rates, and closing costs might keep you up at night.

Then there’s homeowner’s insurance. Your lender needs proof of this before you can close, but scrambling to find coverage the week before closing is just asking for unwanted stress. Plus, you might end up overpaying for a policy that you don’t need.

Here’s what every first-time homebuyer in the Philadelphia area should know about insuring their new home:

Start shopping for insurance early

Most buyers wait until they’re under contract to think about insurance, but the best time to get quotes is actually when you start house hunting. Why? Insurance costs can vary based on the property, its age, its neighborhood, and other factors. Knowing rates upfront helps you budget better and avoid surprises later.

Case in point: A charming stone colonial in Bryn Mawr might have higher premiums than you expected due to its age and unique construction.

What insurance companies look at when you buy a home

When touring homes, you’re probably thinking about the size of the kitchen or how far the property is from your workplace. But insurance companies are looking at something else entirely. The following can affect your ability to get coverage and how much you’ll pay:

• Roof age and condition

This is a biggie. A roof older than 15-20 years can significantly increase your premium, and some carriers won’t underwrite a policy at all if the roof is near the end of its life. Before you make an offer, ask when the roof was last replaced and get an inspection if it looks questionable. This will cost you, but it’s best to be safe rather than sorry.

• Electrical system

Older homes in Philly, especially those with original knob-and-tube wiring or Federal Pacific electrical panels, can be difficult to insure. In fact, some carriers require an electrical inspection or upgrades before they’ll even offer coverage. If you’re buying a home built before around 1970, ask about the electrical system up front.

• Plumbing

Homes with older galvanized or polybutylene pipes may mean higher premiums. Insurance companies know these materials are prone to leaks and failures.

• Swimming pools and trampolines

That backyard pool might be a selling point for your family, but it’s often a liability risk to insurers. Expect to pay more in premiums.

You may also need to meet safety requirements. For example, trampolines should have proper netting and be kept in a fenced area to prevent injuries.

• Wood-burning stoves and fireplaces

These can affect your premium and may require inspection. Any wood-burning appliance should be properly installed and up to code.

• Home-based business

Planning to run a business from your new home? A standard homeowner’s policy typically doesn’t cover business equipment or liability. You may need a separate policy or have to add an endorsement that extends coverage.

• Rental or Airbnb use

If you want to rent out part of your home or do occasional short-term rentals, tell your insurance company. Standard policies typically exclude rental activity, and you could be left without coverage if something goes wrong.

• Your claims history

If you’ve filed claims in the past on a renter’s insurance policy, it can affect your homeowner’s premium, with insurers typically looking back 3-5 years. That doesn’t mean you can’t file a claim when you need to but know that your history might follow you into homeownership.

Understand what homeowner’s insurance actually covers

A standard homeowner’s policy covers five main areas:

1. Dwelling coverage. This protects the structure of your home, including the walls, roof, foundation, and built-in appliances. You can claim on your policy if they’re damaged by a covered event like a fire.
2. Other structures coverage. This protects buildings on your property that aren’t attached to your home, such as a shed or detached garage. The coverage is typically set at 10% of your dwelling coverage, but you can adjust this in some circumstances.
3. Personal property coverage. This protects belongings like furniture and clothing if they’re stolen or destroyed.
4. Liability coverage. This protects you if someone is injured on your property and sues you, or if you accidentally damage someone else’s property.
5. Additional living expenses. Also known as Loss of Use, this covers hotel bills, meals, and other costs if your home becomes uninhabitable due to a covered loss.

What does homeowner’s insurance not cover? Floods, sinkholes, earthquakes, sewer backup, and many other things. These all require separate coverage, but more on that in a moment.

Know the difference between market value and replacement cost

This is kind of confusing for a lot of first-time buyers. The price you pay for your home (market value) is not the same as what it would cost to rebuild it from the ground up (replacement cost).

In Philadelphia, this distinction matters more than you might think. A smaller rowhome in, say, Graduate Hospital might sell for $500,000, but because it’s only 1,200 square feet, it might only cost $300,000 to rebuild. On the flip side, a larger older home in a less expensive area might sell for $350,000 but cost $550,000 or more to rebuild due to its size, architectural details, and other factors.

Your insurance should be based on replacement cost, not market value. An experienced agent can help you calculate the right number, so you’re not underinsured or overpaying.

Don’t skip these often-overlooked coverages

Standard policies often leave gaps. Consider these add-ons:

Water backup and sump pump coverage

If you’re buying a home with a basement, which is common in Philly, this is essential. A standard policy won’t cover damage if your sump pump fails or a sewer line backs up into your home. This add-on typically costs $100-250 per year and can potentially save you tens of thousands in damage.

Service line coverage

Something most first-time buyers don’t realize is that they’re usually responsible for the water, sewer, electrical, and gas lines that run from the street to their house. If one of those underground lines cracks or fails, the repair bill can easily cost $5,000-$15,000, and a standard policy generally won’t cover it.

Service line coverage is an inexpensive add-on that covers the cost to dig up and repair or replace these buried utilities. In older neighborhoods with aging infrastructure, this one’s a no-brainer.

Flood insurance

Even if you’re not in a designated flood zone, Philadelphia’s aging stormwater infrastructure means flash flooding can happen almost anywhere. If you’re near a creek, river, or low-lying area, seriously consider a flood policy through the National Flood Insurance Program or a private insurer.

Umbrella liability

Your standard policy probably includes $100,000-$300,000 in liability coverage. That sounds like a lot — until someone slips on your icy sidewalk and sues. An umbrella policy adds $1 million or more in additional liability protection for a few hundred dollars a year.

Scheduled personal property

If you have jewelry, art, or expensive electronics, your standard policy’s personal property limits may not fully cover them. Assigning a specific coverage amount to each of these items with your insurer ensures they’re protected.

Identity theft protection

Certain policies allow for optional coverage for identity theft. This can reimburse your costs if someone steals information in connection with your home or finances.

Bundling can save you money, but compare first

You’ve probably heard that bundling your home and auto insurance saves money, and it’s often true, with discounts typically ranging from 10% to 20%. But bundling isn’t always the best deal.

Sometimes companies offering the best auto rates aren’t competitive when it comes to homeowner’s insurance, and vice versa. Before bundling, get standalone quotes for each policy and compare them to the bundled price. An independent agent can run these numbers across multiple carriers to find a policy that saves you cash.

Ask about discounts

• Insurance companies offer a surprising number of discounts that many buyers don’t know about:
• New home discount
• Homes built in the last 10-15 years often qualify.
• Water shut-off system discount
• Smart water leak detectors and automatic shut-off systems may save you a few bucks every month.
• Security system discount
• Monitored alarms and smart home devices can reduce costs.
• Claims-free discount
• If you’ve had no recent claims on a renter’s or prior homeowner’s policy, an insurer might reward you with lower premiums.
• Roof age discount
• A newer roof can also reduce how much you pay per month.
• Smoke alarm discount
• Adding a smoke detector or fire alarm system may help you qualify for a premium reduction.

Why work with an independent agent?

When you call a big-name insurer like GEICO or State Farm directly, you’re only getting quotes from that one company. If their rates aren’t competitive, you may end up paying far more than you actually need to.

An independent agent represents multiple insurance carriers and can compare coverage across all of them. Take Main Line Risk Management, for example. This independent agency serving the Greater Philadelphia area works with multiple carriers, removing the need to fill out the same forms over and over.

Beyond rates, an independent agent can explain coverage options in plain English and help you understand what you actually need.

Your first-time homebuyer insurance checklist

To sum everything up:

1. Start getting quotes as soon as you start house hunting
2. Ask about roof age, old electronics and plumbing, and other red flags before making an offer
3. Insure for replacement cost, not market value
4. Think about water backup and service line coverage
5. Consider flood insurance, even outside flood zones
6. Ask about umbrella liability for extra protection
7. Compare bundled polices and standalone policies
8. Find out about every available discount
9. Work with an independent agent who can compare multiple carriers

Buying your first property in the Philly area doesn’t have to cause serious stress. Knowing more about homeowner’s insurance and how different coverages work means you can settle into your new home with fewer worries.

For more information about homeowner’s insurance in the Philadelphia area, contact Joseph Platyan at Main Line Risk Management for a quote today. 

This is a paid partnership between Main Line Risk Management and Philadelphia Magazine