First Home in Rogers? Don’t Make These 5 Mistakes

Buying your first home is one of the most significant financial decisions anyone makes. The Rogers real estate market moves quickly, home prices have increased substantially, and first-time homebuyers often focus intensely on finding the right property while overlooking critical insurance decisions that should happen simultaneously with the purchase process.

The consequences of poor homeowners’ insurance decisions during the first-home purchase can create financial exposure that persists for decades. Understanding common mistakes that first-time homebuyers make helps new homeowners avoid costly errors and ensure adequate protection from day one of ownership.

Mistake #1: Waiting Until Closing Day to Get Insurance Quotes

The most common and costly mistake first-time homebuyers make is delaying homeowners’ insurance shopping until days before closing. This creates multiple problems.

Why Timing Matters for Homeowners Insurance

Lenders require proof of homeowners’ insurance coverage before they will fund your mortgage. Insurance companies need time to process applications, issue policies, and provide proof of insurance documents to lenders. Waiting until closing day creates artificial urgency that prevents proper comparison shopping and results in accepting whatever coverage can be arranged quickly.

The pressure timeline: Closing is scheduled, lenders request insurance proof 3 to 5 days before closing, first-time buyers scramble to obtain quotes, agents feel rushed, and coverage decisions happen under stress rather than thoughtful analysis.

Better approach: Begin homeowners’ insurance shopping simultaneously with making an offer on a property. This timing allows 2 to 3 weeks for quotes, comparison, and deliberate decision-making before closing pressure arrives.

What Happens With Last-Minute Insurance Purchases

Rushing into homeowners’ insurance coverage typically results in:

• Accepting the first quote received rather than comparing options
• Choosing coverage limits that don’t match home value or asset protection needs
• Missing available discounts because agents lack the time to discuss options
• Paying higher premiums because no comparison shopping occurred
• Selecting inappropriate deductible levels
• Overlooking important coverage types like umbrella insurance

Customers who comparison shop when not under time pressure typically save $300 to $500 on their first year of homeowners’ insurance while obtaining better coverage than rushed purchases provide.

Mistake #2: Underestimating Coverage Needs or Dwelling Limits

First-time homebuyers frequently purchase coverage based on their loan amount rather than the actual home replacement cost. This creates significant underinsurance exposure.

The Difference Between Loan Amount and Replacement Cost

A homebuyer with a $250,000 mortgage on a $300,000 home might purchase coverage for $250,000, assuming that matches their financial exposure. However, the relevant number for insurance purposes is the cost to rebuild the home if it is destroyed, not the purchase price or loan amount.

In Rogers’ current market, building costs range from $150 to $200 per square foot, depending on construction quality, materials, and labor costs. A 2,000-square-foot home might cost $300,000 to $400,000 to rebuild, regardless of its purchase price.

Real consequence: If a fire destroys a home with $250,000 in coverage when $350,000 is needed for replacement, the homeowner faces a $100,000 shortfall. Insurance covers the $250,000, but the homeowner must cover the remaining rebuild cost from personal resources.

How to Determine Appropriate Coverage Limits

Determining proper dwelling coverage requires calculating the actual replacement cost rather than estimating based on the purchase price. Several approaches exist:

Insurance company estimating tools: Many insurers provide online calculators that estimate replacement costs based on home characteristics.

Professional appraisals: Insurance agents can arrange professional replacement cost appraisals that calculate exact rebuild costs for specific properties.

Square footage calculations: Multiply home square footage by current per-square-foot building costs in the Rogers area (currently $150 to $200 per square foot) to approximate replacement cost.

Contractor estimates: Local contractors can provide rough estimates of total rebuild costs based on home specifications.

First-time homebuyers should verify that their dwelling coverage limits match actual replacement costs, not loan amounts or purchase prices. Rogers homeowners insurance agents can provide specific guidance on appropriate coverage limits for individual properties.

Mistake #3: Ignoring Flood Risk Despite Being Outside FEMA Flood Zones

Many first-time homebuyers assume that if their property is outside official FEMA flood zones, flood insurance is unnecessary. This assumption creates substantial exposure in Arkansas.

Arkansas Flood Risk Reality

Arkansas experiences regular flooding from multiple sources: river flooding from White River and other waterways, flash flooding from heavy rainfall, and localized flooding from inadequate drainage. FEMA flood zones represent the official high-risk areas, but significant flood risk exists outside these zones.

Springdale-specific data: Approximately 25 percent of Springdale homes face flood risk despite many being outside official FEMA flood zones. Rogers and Bentonville also have substantial populations in flood-prone areas that fall outside FEMA designations.

Standard Homeowners Insurance Does Not Cover Flooding

This is critical: standard homeowners’ policies specifically exclude flood damage. A family that experiences flood damage without separate flood insurance has no coverage and must pay all repair costs from personal resources.

Flood insurance requirements: Homes in FEMA high-risk zones financed with federally backed mortgages must carry flood insurance. Homes outside high-risk zones can choose whether to purchase flood insurance. Many homes outside high-risk zones still experience floods, and owners without insurance face total loss.

Cost of flood insurance: National Flood Insurance Program (NFIP) policies start around $400 to $600 annually for properties outside high-risk zones. This modest cost provides substantial protection compared to potential flood damage costs of $10,000 to $50,000 or more.

First-time homebuyers should evaluate their specific property’s flood risk using FEMA flood maps and local topography, then decide whether flood insurance protects their financial interests. Many Rogers and Springdale homeowners choose to purchase flood coverage despite being outside high-risk zones due to the catastrophic potential of flood damage.

Mistake #4: Not Bundling Auto and Home Insurance Strategically

First-time homebuyers frequently maintain separate auto and home insurance policies without evaluating bundling options. Strategic bundling often saves money while simplifying policy management.

When Bundling Creates Genuine Savings

Bundling auto and homeowners insurance typically provides 10 to 25 percent discounts on combined policies. However, actual savings depend on whether both individual policies offer competitive rates.

Working with independent insurance agents who represent multiple carriers allows bundled versus unbundled comparisons. Comparing the best standalone auto rate plus best standalone home rate against bundled options reveals which approach saves the most money for specific household situations.

Real example: A Rogers couple could bundle with one carrier for $2,500 annually (25 percent discount applied), or obtain auto insurance from one carrier at $900 and home insurance from another at $1,450, totaling $2,350. In this scenario, unbundling saves $150 annually despite forgoing the bundle discount.

Discount Optimization Beyond Bundling

Beyond bundling decisions, multiple discounts exist that first-time homebuyers typically don’t claim:

• New home discounts (some carriers offer 5 to 10 percent discounts for newly constructed or recently updated homes)
• Multi-policy discounts (auto, home, umbrella all with one carrier)
• Home safety feature discounts (security systems, fire extinguishers, smoke detectors)
• Paid-in-full discounts (5 to 10 percent for paying annual premiums upfront)
• Paperless and autopay discounts (2 to 7 percent combined)

First-time homebuyers should specifically ask about these discounts when obtaining quotes rather than assuming agents will volunteer this information.

Mistake #5: Not Considering Umbrella Insurance for Asset Protection

First-time homebuyers often view homeowners’ insurance as sufficient liability protection. However, umbrella insurance provides important additional liability coverage that homeowners’ insurance alone typically does not provide.

How Homeowners’ Liability Works

Standard homeowners policies include liability coverage, typically ranging from $100,000 to $300,000. This coverage applies if someone is injured on your property and wins a legal judgment against you.

However, a serious injury lawsuit can generate judgments exceeding standard policy limits. A guest injured on your property, a delivery person who falls, or a neighbor injured by a tree from your property could win a judgment of $500,000 or more. Standard homeowners’ liability coverage does not protect policy limits.

Umbrella Insurance Fills the Gap

Umbrella (or personal excess liability) insurance provides additional liability coverage above homeowners and auto policy limits. Typical umbrella policies provide $1 million in additional coverage.

Cost of umbrella insurance: $150 to $300 annually for $1 million in coverage for homeowners with adequate underlying insurance limits.

Protection provided: If someone wins a $750,000 judgment against a homeowner with $300,000 in homeowners’ liability coverage, umbrella insurance covers the $450,000 excess, preventing personal asset seizure or wage garnishment.

First-time homebuyers should evaluate whether umbrella insurance protects their assets. Homeowners with significant savings, investment accounts, or other assets should typically carry umbrella coverage. Those with minimal assets may decide the additional cost is unnecessary.

Additional Considerations for First-Time Homebuyers in Rogers

Home Improvements and Insurance Coverage

Recent home improvements or updates should be reported to insurance companies, as many improvements qualify for discounts and may affect coverage needs. New roofs, updated electrical systems, new plumbing, security systems, and storm-resistant features all may qualify for discounts or affect replacement cost calculations.

Annual Policy Reviews

Insurance needs change over time. Annual policy reviews help identify new discounts, ensure coverage remains appropriate, and verify that rates remain competitive. Life changes, like adding vehicles, renovations, or changes in property use, should trigger policy reviews.

Claims Process Understanding

First-time homeowners should understand their policy’s claims process before problems occur. Knowing how to file claims, what documentation is required, and claim timelines reduces stress if damage occurs and helps ensure smooth claim resolution.