This is another of the 10-12 day “due diligence” reviews set forth in Paragraph 15 of your contract.
For this reason, it is important to reach out to your insurance agency regarding home-owners insurance as soon as the property is under contract. The insurer will need to obtain information about the property and about your insurance needs (limits, deductibles, etc) to provide a quote for coverage… the title company will eventually need the cost estimate to prepare your estimated expenses.
Very importantly, ask your insurer to review whether the house or any portion of your new property is located within a flood zone. Even if you don’t believe it does: ask.
If the insurer’s review determines the property (or any portion thereof) does lie in a flood zone, ascertain which Flood Zone designation has been assigned… the specific flood zone designation will determine whether flood insurance is required and the cost of that insurance.
This is important, as the cost of insurance could be determinative as to whether you wish to proceed with the purchase. And you have just those 10-12 days to provide notice to the Seller if the assessment renders an unsatisfactory result.
You may ask, “Do I need home owners insurance?”. If you are obtaining a mortgage to finance the purchase of your new home then the answer is, “Yes”… your lender will require you to purchase a sufficient amount of insurance on the property to “cover” their investment. If you are paying cash for the property, the answer should still be, “Yes”… your home and the contents therein likely represent the largest financial investment you will ever make – why wouldn’t you want to protect it?