For many home buyers, insurance is the last (if any) thing they consider when making a purchasing decision. But as you search for a new home, keep in mind that the physical characteristics of a house—its size, location, construction, and overall condition—can affect the cost and availability of homeowner’s insurance. A recent article on the Equifax Finance blog, “
What Factors Influence My Homeowner’s Insurance Rates?” explains how some of these factors impact your insurance costs
The location of the home: The obvious example is coastal properties, which are beautiful but cost more to insure due to weather-related risks, like possible damages from hurricanes or windstorms. Private homeowners insurance may not even be available in certain high-risk areas, and in those areas, homeowners may only be able to purchase insurance through government-run programs, which sometimes is more expensive and provides less coverage. A not-so-obvious example is the property’s proximity to a fire station or fire hydrant. Homes located closer to fire stations and fire hydrants have lower premiums than those located farther away. Damages caused from flooding and earthquakes are typically not covered by standard insurance policies. If you buy a home in an area prone to either of these risks, you’ll need to purchase separate insurance. Flood insurance is available through a few specialty providers as well as the federal government’s National Flood Insurance Program. Residents in California, which is prone to earthquakes, can get insurance through the California Earthquake Authority, a private/public organization.
The age of the home: Insurers may consider older homes (with older plumbing and electrical systems or roofs) in their calculations. If those systems have been recently updated, be sure that your insurer knows, as it could mean discounts in your premiums.
If you are considering making an offer on a home, request a copy of the home’s insurance loss history report, which is a record of claims on the home in the past five years. This will show you what claims have been filed, the damage that occurred and how it was repaired. This report will give you important background information on the home but could even lower your insurance premium; if for example, a claim was filed due to hail damage to the roof, which was then replaced, resulting in a lower rate.
If you have found a home you really want to make an offer on, contact several insurance companies for quotes first. Ask neighbors, your real estate agent, family, friends and coworkers for their recommendations on insurance companies.
Read the full article on the Equifax Finance blog, and while you’re there, check out the other articles on insurance and real estate. There are also hundreds of other helpful articles on a range of personal finance topics from retirement to credit to identity theft protection and more.