Buying a home can be very stressful, and insurance can be an afterthought to homeowners who simply want to get through all the hurdles so they can move in and get settled. While some may see insurance as a stepping-stone in the home-buying process, understanding factors that affect insurance rates, choice and availability will help homebuyers make informed decisions up front so they don’t suffer from sticker-shock when it comes time to find coverage on the house they want to make their home.
Here are some factors homebuyers should keep in mind when house hunting:
- Cost to rebuild
Coverage A, or Dwelling coverage, should reflect the true cost of replacing the structure. Note that the cost to replace is not the cost to purchase—these are often two very different numbers.
Just as location affects the home’s value, it also plays a role in the cost to insure it. For example, proximity to the coast affects insurance rates and may require you to have coverage outside of the standard Homeowner’s policy. High crime rates also impact rates, especially if there have been a lot of theft claims. Whether or not the home is in a mandatory Flood Zone is important, too, because Flood insurance may be required.
- Condition of the roof
Be sure to find out the age of the roof and if it’s in need of repairs. An inspection will help identify possible pitfalls.
- Age of home
Older homes can be charming, but they can cost more than a newer home to maintain and insure.
- History of earthquakes
Earthquakes are not covered by a standard Homeowner’s policy but may be added as an endorsement. If the area or home has had prior claims, it may be worth considering.
- Swimming pool, hot tub, trampoline
Features that make a home the place where all the kids want to hang out also may increase your risk and thus your need for liability insurance and maybe even an Umbrella policy.
Of course, if you don’t know what you don’t know, seek counsel from an Insurance Agent. The expert advice you receive may be invaluable in the event of a disaster.
Sources: Insurance Information Institute