The Complete Home Buying Insurance Checklist for Northwest Arkansas: What to Get Before You Close

Buying a home in Northwest Arkansas is exciting, whether you’re moving to Bentonville for work, settling in Rogers for the schools, or finding your dream home in Fayetteville or Springdale.

But between the inspections, appraisals, loan approvals, and closing paperwork, one critical step often gets rushed:

Getting the right homeowners insurance in place before closing day.

Most buyers wait until the last minute. They grab the first quote their lender accepts. They don’t ask questions. They don’t compare coverage. And they don’t realize what’s missing until it’s too late.

As an independent insurance agency serving homebuyers across Northwest Arkansas, OZK Insurance has seen every mistake, and helped hundreds of families avoid them.

This guide is your complete home buying insurance checklist, covering:

• What your lender requires (and what they don’t tell you)
• What coverage you actually need in NWA
• What endorsements protect you from local risks
• How to avoid overpaying or being underinsured
• When to lock in your policy
• Real examples of coverage gaps we’ve prevented

Let’s make sure you’re protected from day one.

Part 1: What Your Lender Requires (The Bare Minimum)

If you’re financing your home, your mortgage lender will require proof of homeowners insurance before closing.

Here’s what they mandate:

1. Dwelling Coverage (Coverage A) Equal to the Loan Amount

The lender wants to ensure the structure can be rebuilt if destroyed.

Important:
The loan amount is often less than the actual replacement cost. This creates a coverage gap.

Example:

• Loan amount: $280,000
• Actual rebuild cost in Bentonville: $340,000
• Coverage gap: $60,000

If your home is destroyed, you’d be $60,000 short — even though you met the lender’s requirement.

2. The Lender Must Be Listed as the Mortgagee

This ensures the lender gets paid if the home is destroyed and you stop making payments.

3. Proof of Insurance Before Closing

You’ll need to provide a declarations page or insurance binder showing:

• Effective date (usually closing day)
• Coverage amounts
• Lender listed as mortgagee

What Lenders DON’T Require (But You Still Need):

• Personal property coverage
• Liability coverage
• Medical payments coverage
• Loss of use coverage
• Endorsements for local risks (wind, hail, water backup, etc.)

Bottom line:
Meeting the lender’s minimum requirements does not mean you’re properly insured.

Part 2: The 5 Core Coverages Every NWA Homebuyer Needs

A proper homeowners policy (HO‑3) includes five essential coverages:

1. Dwelling Coverage (Coverage A)

Protects the structure of your home from:

• Fire
• Wind and hail
• Lightning
• Vandalism
• Theft
• Certain water damage events

How much you need:
Enough to rebuild the home at today’s construction costs, not the purchase price.

NWA-specific note:
Construction costs in Bentonville and Rogers have increased 18–25% since 2021 due to labor shortages and material costs.

2. Personal Property Coverage (Coverage C)

Covers your belongings:

• Furniture
• Electronics
• Clothing
• Appliances
• Tools
• Jewelry (up to sub-limits)

How much you need:
Typically 50–70% of your dwelling coverage, but you should calculate based on actual belongings.

3. Liability Coverage (Coverage E)

Protects you if someone is injured on your property and sues you.

Minimum recommendation:
$300,000

Better option:
$500,000 or $1,000,000

Why it matters in NWA:
Arkansas has a high rate of premises liability lawsuits, especially involving:

• Slip-and-fall accidents
• Dog bites
• Trampoline injuries
• Pool accidents

4. Medical Payments (Coverage F)

Pays for minor injuries to guests, regardless of fault.

Typical amount:
$1,000–$5,000

Example:
A guest trips on your front step and needs stitches. Medical payments coverage handles it without a lawsuit.

5. Loss of Use (Coverage D)

Pays for temporary housing if your home becomes uninhabitable due to a covered loss.

How much you need:
Typically 20–30% of dwelling coverage.

Real NWA example:
A Rogers family had a kitchen fire that made their home unlivable for 3 months. Loss of use coverage paid for:

• Hotel stays
• Meals
• Storage for belongings

Total reimbursement: $11,400

Part 3: Essential Endorsements for Northwest Arkansas Homebuyers

Standard homeowners policies have gaps. Here are the endorsements every NWA homebuyer should consider:

1. Water Backup Coverage

Covers damage from water that backs up through:

• Sewer lines
• Drains
• Sump pumps

Why you need it in NWA:
Older neighborhoods in Rogers, Fayetteville, and Springdale have aging sewer systems prone to backups.

Cost:
$50–$150/year

Real example:
A Bentonville homebuyer closed on a 1980s home. Two months later, a sewer backup caused $9,200 in damage. Without the endorsement, they paid out-of-pocket.

Water backup is one of the most common claims in NWA — and one of the cheapest endorsements to add.OZK Insurance includes it in every homebuyer quote so you’re protected from day one.

2. Ordinance or Law Coverage

Covers the cost to bring your home up to current building codes after a covered loss.

Why you need it:
If your home is damaged and local codes have changed since it was built, you may be required to:

• Upgrade electrical systems
• Install fire sprinklers
• Add ADA-compliant features

Standard policies don’t cover these extra costs.

Recommendation:
Add 10–25% of your dwelling coverage.

3. Replacement Cost Coverage for Personal Property

Standard policies pay actual cash value (ACV) for personal property, which factors in depreciation.

Example:
Your 5-year-old TV is stolen.

• ACV payout: $150
• Replacement cost payout: $600

Upgrade cost:
Usually $20–$50/year

4. Equipment Breakdown Coverage

Covers mechanical or electrical failure of:

• HVAC systems
• Water heaters
• Built-in appliances

Why it matters:
Standard policies only cover “sudden and accidental” damage, not wear and tear or mechanical failure.

5. Flood Insurance

Flood damage is never covered by standard homeowners policies.

Why NWA homebuyers need it:

• New developments often have poor drainage
• Properties near Beaver Lake, creeks, or low-lying areas are at risk
• FEMA flood maps are often outdated

Cost:
$400–$1,200/year depending on flood zone

Real example:
A Springdale homebuyer purchased a home outside the FEMA flood zone. Heavy rains caused $18,000 in damage. No flood insurance = no coverage.

Part 4: When to Lock In Your Homeowners Insurance

Timing matters. Here’s the correct sequence:

Step 1 — Get Quotes During the Inspection Period

Don’t wait until a week before closing. Start shopping as soon as your offer is accepted.

Why:

• Gives you time to compare carriers
• Allows you to add endorsements
• Prevents last-minute stress

Step 2 — Finalize Coverage 7–10 Days Before Closing

This gives your agent time to:

• Bind the policy
• Add the lender as mortgagee
• Send proof to your lender and closing attorney

Step 3 — Set the Effective Date to Match Closing Day

Your policy should activate the moment you take ownership – not before, not after.

Why:
If closing is delayed, your policy must be adjusted. If you close early and the policy isn’t active, you’re uninsured.

Part 5: How to Avoid Overpaying for Home Insurance

Here are the most common ways NWA homebuyers overpay:

1. Not Comparing Multiple Carriers

Rates vary dramatically by carrier, even for the same coverage.

Example:

• Carrier A: $1,850/year
• Carrier B: $1,320/year
• Carrier C: $1,580/year

Same home. Same coverage. $530/year difference.

2. Not Bundling Home + Auto

Most carriers offer 15–25% discounts when you bundle.

Real savings:
$400–$800/year for most NWA households.

3. Choosing the Wrong Deductible

A higher deductible lowers your premium, but only if you can afford to pay it.

Common options:

• $1,000 deductible
• $2,500 deductible
• 1% or 2% wind/hail deductible

NWA-specific note:
Many carriers now require separate wind/hail deductibles (1–2% of dwelling coverage) due to severe storm frequency.

4. Not Asking About Discounts

Common discounts include:

• New home discount
• Security system discount
• Fire/smoke alarm discount
• Claims-free discount
• Paid-in-full discount
• Paperless/autopay discount

Part 6: Real Examples of Coverage Gaps We’ve Prevented

Example 1: Bentonville First-Time Buyer

• Lender required $250,000 dwelling coverage
• Actual rebuild cost: $315,000
• OZK adjusted coverage to $320,000
• Premium increase: $78/year

Result:
Fully protected for an extra $6.50/month.

Example 2: Rogers Family (Older Home)

• Home built in 1975
• No ordinance or law coverage
• OZK added 25% ordinance coverage
• Premium increase: $42/year

Result:
Protected against $50,000+ in code upgrade costs.

Example 3: Fayetteville Homebuyer (Near Creek)

• Home outside FEMA flood zone
• OZK recommended flood insurance anyway
• Cost: $520/year

Result:
Six months later, heavy rains caused $12,800 in damage. Flood insurance covered it.

FAQ: Common Questions from NWA Homebuyers

“Can I get homeowners insurance with bad credit?”

Yes, but it may cost more. Some carriers weigh credit heavily; others don’t. Independent agencies like OZK can find you the best option.

“Do I need insurance if I’m paying cash?”

Legally, no — but financially, yes. You’re risking your entire investment without it.

“Can I switch insurance after closing?”

Yes, but you must notify your lender and ensure continuous coverage.

“What if the appraisal is lower than the rebuild cost?”

Appraisals reflect market value, not rebuild cost. Always insure based on rebuild cost.