Embedded Insurance: A Winning Strategy for Young Homebuyers

There’s a new market segment dominating the homebuying industry: millennials and Generation Z. Commonly referred to as “digital natives,” this demographic shares a set of expectations in all purchases they make, and buying a home—likely the biggest purchase of their lifetime—is certainly no exception. Builders who understand their preferences, and the obstacles they face, can implement digital strategies, like embedded home insurance, to ensure a more positive experience and help close the sale.

Who are Digital Natives?

Millennials, born between 1981-1997, and Gen Z, born after 1997, are the youngest generations eligible to buy a home. Together, the two generational cohorts accounted for 60% of all home purchase mortgage applications in 2023. The share of this demographic’s first-time homebuyer mortgage applications is even higher, totaling 83% of the market. They will likely continue to maintain the leading homebuyer status for the next several years, making them prime candidates for new construction homes.

Demographic Dynamics

These tech-savvy generations have similar expectations when it comes to the purchasing process, favoring speed, simplicity, and transparency in their transactions. They also appreciate guidance and advice from experts, another fundamental aspect that influences their decisions. This combination emphasizes the importance of a transparent and seamless homebuying process.

It’s also important to be aware of a common obstacle for this age bracket: housing affordability challenges. With the average monthly mortgage payment nearly double what it was four years ago, people are finding it more difficult to afford a house. Two factors make this further complicated for younger buyers: they don’t have a home to sell, and many of them are still paying off sizable student loan debt. These both take significant funds away from what could go to a mortgage or insurance payment.

In spite of these economic obstacles, data shows that millennial and Gen Z adults are the most optimistic and eager generations to become homeowners. They’re even willing to consider interest rates as high as 6.2% and 6.3% respectively, proving homeownership is still a top priority. This is where an embedded insurance solution can be a game-changer. Builders who integrate insurance early into the homebuying process can help buyers alleviate the stress of affordability concerns using methods that appeal to this demographic. Here’s how this valuable service works.

Embedded Insurance: Concept and Practice

Typically, securing home insurance is a separate and time-consuming process for homebuyers. They need to gather details about the home, research insurance providers, and compare coverage options and prices. It can cause anxiety and frustration that carries over into other steps of the homebuying journey.

Fortunately, embedded home insurance is a dependable and innovative tool for builders to help their customers obtain coverage. Builders who embed insurance provide their customers the option of a no-obligation quote during the signing of the purchase agreement. Homebuyers who elect to go with the embedded offer are able to take care of this requirement quickly, allowing more time to focus on the many other steps of buying a home.

An embedded insurance model also aligns with the preferences of these younger generations by offering a simplified digital process where buyers can instantly access the quote. It provides price transparency, presenting customers the amount they will need for the insurance portion of their monthly mortgage payment—no waiting and no surprises. And builders who proactively take this extra step may be viewed as trustworthy advocates who understand the needs of their homebuyers. Using this model helps builders complete a successful sale and sets the stage for strong, long-lasting relationships with their customers.

Find a Dependable Home Insurance Partner

Embedded insurance provides a significant opportunity to attract and engage this technology and transparency-driven demographic. Builders can get started by choosing an experienced insurance agency—a partner like Westwood Insurance Agency.

Founded by a home builder more than 70 years ago, Westwood works with dozens of the country’s top builders to seamlessly integrate insurance into the homebuying process. Our technology-based approach helps close more than 100,000 homes each year on time, every time. And our relationships with more than 40 insurance companies allows customized policy options with maximum savings. There’s no need for buyers to shop around for additional quotes, and most who do still come back to us.

Given the challenging market conditions, embracing strategies like embedded insurance will be key to staying competitive and meeting the needs of these young homebuyers. To learn more about embedded insurance and a partnership with Westwood, please visit westwoodinsurance.com/partners/builders.