Illinois Homeowner Insurance for First-Time Homebuyers

As a first-time homebuyer, your to-do list can seem overwhelming, but homeowners insurance is one of the tasks you can’t afford to have dropped to the bottom of the priority list.

The type and amount of insurance coverage you need depends on a variety of factors, including Illinois requirements and the conditions specific to your new home. This can be daunting to figure out alone.

Local insurance advisors work with first-time homebuyers in Illinois every day. They know what coverage types are required and what extra protection homeowners need to maximize their financial security. This guide breaks down insurance requirements and strategies to help first-time homebuyers meet their coverage minimums and protect their new investments.

Is Homeowners Insurance Required in Illinois?

There is no law specific to Illinois residents that requires homebuyers to purchase a homeowners insurance policy. However, every homebuyer needs insurance, not just for the protection it provides, but also because every reputable lender will require proof of an insurance policy before finalizing a home purchase.

Most lenders do not require specific policy elements, but even broad policies help protect their investment. Since their goal is to reduce their risk assessment, improving homeowners insurance policies can lead to better lending terms in some cases. In all cases, assembling the right liability insurance protects first-time buyers from the costs of accidents, both predictable and unexpected.

Policies Every Homebuyer Needs to Protect Their Purchase

Standard homeowners insurance policies provide helpful foundations to keep a new home purchase safe. However, first-time homebuyers in Illinois will likely want above-average protection for their new investment.

These policy tips will help you expand your liability insurance to cover more of the major risks that can impact your home security and financial future:

1. Upgrade Dwelling Coverage With Full Replacement Cost

Dwelling coverage protects your structure from common causes of damage, including fires. However, many standard dwelling coverage policies only provide Actual Cash Value coverage, which reimburses the current value of structures and fixtures, factoring in depreciation.

Replacement Cost Value is an upgrade to dwelling coverage that will likely cost more, but the coverage is more comprehensive. With replacement cost coverage, homebuyers can claim the cost of replacing the structure as if it were new, factoring in the current cost of materials and labor. This upgrade provides much-needed peace of mind since homeowners with Replacement Cost Value do not receive reduced reimbursements due to depreciation.

1. Flood Insurance Addresses a Major Risk Area in Illinois

Homeowners in Illinois deal with costly, often devastating, flood damage. Yet, flood coverage is often not included in basic homeowners insurance policies. Depending on the flood zone risk level, some mortgage lenders may require flood coverage before approving the loan, but most homebuyers in Illinois can benefit from coverage even if it isn’t required.

To put the flood risk in Illinois into perspective, 15% of the state is occupied by inland bodies of water, including lakes, streams, and rivers, which puts it among the top states in terms of flood risk. In Illinois, floods account for over 9 in 10 declared disasters, causing around $700 million in property damage every year.

To protect themselves from this ever-present threat, new homebuyers in Illinois need to consider flood insurance as a highly recommended additional expense to cover flood-related losses, including damage to property, dwellings, belongings, additional structures, vehicles, and residents.

Pro Tip: If flood insurance is difficult or expensive to obtain through a provider or broker, visit the FEMA National Flood Insurance Program website for low-cost flood insurance options.

1. Mine Subsidence Coverage Protects Against a Forgotten Risk in Illinois

Another area of homeowners insurance commonly missed in Illinois is mine subsidence coverage. In certain high-risk counties, this coverage is required due to the presence of underground coal mines, which can collapse and damage property. Signs of damage include cracked home foundations or driveways, damaged doors, floors, and fixtures, and yard damage.

This may seem like a rare occurrence, but 34 counties in Illinois are considered high-risk for mine subsidence damage, totalling around 323,500 acres of developed land, including over 360,000 homes. The damage caused by mine subsidence will not be covered by other policy types, such as dwelling or earthquake coverage.

Speak with your local broker or provider about the risk level of mine subsidence damage in your area and how you can obtain coverage.

Pro Tip: Compare quotes from multiple providers by clarifying all the add-ons you will need to create a comprehensive policy. Find out if they offer bundles or other saving strategies. Speak with a local advisor about risks specific to Illinois homes to make sure you aren’t getting a one-size-fits-all insurance plan.

Local Advisors Provide Personalized Coverage Strategies

Being a first-time homebuyer can be overwhelming, but at Pro Insurance Group, our team of local insurance advisors provides decades of Illinois-specific industry knowledge to make your buying process easier. This includes establishing baseline homeowners insurance policies and expanding them to address common causes of financial insecurity for Illinois homebuyers.

Contact our team today to learn more about personalizing homeowners insurance for first-time homebuyers in Illinois, including the basic and expanded policies you will need to protect your investment.