Being a first-time homebuyer also means being a first-time buyer of homeowner’s insurance.

Just like every other part of the home-buying process, this decision requires research, comparison shopping, and careful consideration. Your homeowner’s insurance provides broad coverage for damage to your house (unless specifically excluded in your policy), as well as coverage for personal liability exposures which may arise from being a homeowner, so it’s important to choose wisely.

Start thinking about insurance early

When you first start looking for a home, you have to do a lot of calculations about monthly costs, including determining what you can afford. But to figure out the true cost of your home purchase, you’ll also need to know how much taxes and insurance will cost. Typically these are bundled with your mortgage payment to comprise your monthly payment.

You can look up average rates in your state, but the cost of homeowner’s insurance is hard to estimate. You will likely need an actual address to get a quote, says Laura Adams, senior insurance analyst for InsuranceQuotes.com, a website that helps users shop for insurance. Agents typically need extensive information on a property before they can estimate the cost of insurance.

Different factors affect rates, particularly the type of structure (brick, concrete, wood frame, and so on), the square footage, the age of the home, and the exact area where the home is located.

“We’re looking for good guts,” says Camilla Jarman, an insurance agent with American Family Insurance in Milwaukee. “We want to see good plumbing, electrical, roof, furnace, and foundation.”

Typically, you will see the following areas of coverage:

  • Property damage, including your dwelling, other structures not attached to your home, (such as a garage), and personal property inside your home.
  • Loss of use. This covers living expenses in case you cannot use your property, such as when it is being repaired.
  • Personal liability. This will protect you against claims resulting from accidents on your property.
  • Medical expenses. This can offer coverage for injuries that occur on your property.

Decide what coverage you need

Once your offer on a home has been accepted, you’ll want to determine how much coverage you need.

While it might seem attractive to go with a larger deductible and less coverage—and therefore pay less—if disaster strikes, you could wind up being responsible for the difference between what’s covered and what you owe for repairs. You may want to consider starting with a policy that costs a little more but offers more coverage; you can always change it later.

Also, make sure you know if the policy covers replacement cost or actual cash value. Replacement cost is the amount it will take to repair or rebuild your home without deducting for depreciation, while actual cash value takes depreciation into account. Actual cash value coverage may be a way to save money on your policy, but it could hurt in the long run if disaster strikes.

Be sure to ask your agent about flood and earthquake insurance if you live in a high-risk area. These natural disasters are generally not covered by a standard homeowners insurance policy.

Shop around

Different insurance companies weigh factors in different ways, says Adams, so you’ll want to get more than one quote. It’s important to keep in mind that insurance companies typically use a credit-based insurance score, so that can shift offers as well.

Start with the company where you have auto or renter’s insurance and solicit recommendations from your lender. You may want to ask family and friends for their input as well. Then call around for a few quotes to find the best deal.

“You also definitely want to ask about discounts and leave that open-ended; don’t just ask about specific discounts,” Adams says. “Every insurance company offers a different set.” For example, you may get money off for adding a security system, for being a nonsmoker, or for bundling with your auto insurance.

Insurance rates can vary, but according to a National Association of Insurance Commissioners survey released at the end of January, the national average for insurance premiums hovers around $1,000 a year, spanning from $2,084 in Florida to $538 in Idaho.

Keep in mind that you’ll need to prove you have homeowner’s insurance before you close on your new home, so don’t wait until the last minute to decide on coverage. Typically, you will need your insurance binder (a temporary insurance policy) and paid receipts at least seven to 10 days prior to closing.

Ilyce Glink is the author of over a dozen books, including the bestselling 100 Questions Every First-Time Home Buyer Should Ask and Buy, Close, Move In!