Regardless of whether you are a first time home buyer, considering the purchase of a second home or an empty nester looking for a cozy smaller property, it is important to factor in the potential insurance costs of the home you are considering when calculating the overall price of owning the house, according to the Insurance Information Institute (I.I.I.).
"When people look at homes, they tend to focus on factors such as property taxes, neighborhoods, school districts and available recreational and cultural opportunities," said Jeanne M. Salvatore, senior vice president and consumer spokesperson for the I.I.I. "But an often overlooked item is the insurance implications of a specific house."
"You will be paying for insurance for as long as you own it, so you should factor the cost of insurance into the home buying process. You don't want to find out that your dream home is more expensive to insure than you thought after you own it," pointed out Salvatore.
When looking at prospective new homes, the I.I.I. suggests asking the following questions:
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How far is the home from the fire department? Houses that are near a fire station with professional firefighters are usually cost less to insure.
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What is the condition of the plumbing and electrical systems? Poorly maintained, unsafe and/or outdated systems can cost more to insure.
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Is the home vulnerable to wind or hail damage? While a typical homeowners policy in Minnesota will include coverage for wind and hail, there may be special limits for your home. Is there a separate windstorm or hail deductible, and how high is it? Will the policy limit coverage on the roof to actual cash value instead of replacement cost?
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Is the house at risk from flooding? Flood insurance is not covered under a standard homeowners insurance policy. However, it is available from the National Flood Insurance Program, which is serviced by private carriers, and from a few specialty insurers.
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What about earthquake or earth movement risk? Earthquake insurance requires an endorsement or a separate policy.
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Is the house well built and well maintained? Homes built by reputable builders using disaster resistant materials and designed to meet current building codes are likely to better withstand natural disasters.
A knowledgeable home inspector and your insurance agent can be helpful in answering these questions. "Keep in mind, that the size, location, construction and overall condition of the house can affect the cost, choice and availability of home insurance," noted Salvatore.
Source: Insurance Information Institute (iii.org)