Whether you’re buying your first home or you have a few home buying experiences under your belt, there are potential risks to keep in mind that could affect your home insurance premium or your likelihood of filing a claim.
We’ve put together a list of five things you should look out for during the home buying process, including the home inspection, to help you consider the risks and financial impact they can have on your home insurance. Let’s get started.
1. Location-based risks.
There are risks involved in the home’s location due to fire and police accessibility, natural disasters and other weather-related damage that can occur more frequently in certain areas. Check if the home you’re considering buying is in an area that is:
- In a flood zone
- Near a fire station or police station
- On or near an earthquake fault line
- Impacted by health risks like mold or radon issues
If you live along the coast or in a flood zone, consider getting separate flood insurance to protect from heavy rains or hurricane damage. Similarly, if you live in an earthquake zone, consider a separate earthquake endorsement because earthquake losses aren’t covered under traditional home insurance.
Talk to an independent insurance agent about common insurance claims in the area to help you decide what kind of home insurance you’ll need for your potential next home.
2. Age of home risks.
If you’re considering buying an older home, it’s important to pay close attention during the home inspection and to ask lots of questions. Older homes with original roofing, windows, plumbing and electrical components may not meet today’s standards and building codes. In the event of a house fire, older homes with unique features may be difficult or costly to recreate and replace. In general, as the home ages the costs of insurance will increase.
The home buying process can be tricky when older homes are involved. Stay informed by knowing the different risks you could encounter based on the year the home was built. Here are some significant risks and years to keep in mind:
- The U.S. Environmental Protection Agency (EPA) banned Asbestos use in homes as of 1989. Asbestos can still be found in homes built or renovated before the 1990s.
- Lead-based paint is a hazard that can still be found in homes built before 1978.
- Homes built between the 1890s and 1930s often feature knob and tube wiring which cannot keep up with modern electrical appliance demands.
Older homes are also more likely to host unwanted pests or succumb to structural integrity issues. A home inspection can help pinpoint any risks involved with buying an older home.
3. Age and condition of home appliances.
During your home buying process, you may not have factored in a budget for home appliance repairs or replacements, especially if you’re buying your first home. It can be expensive to replace major appliances like the water heater, furnace or air conditioner as well as standard appliances like a washer, dryer, dishwasher, water softener or humidifier.
Ask how old each appliance is while you’re touring your potential new home and get a professional opinion on the condition of each appliance during the home inspection. It may be in your best interest to upgrade some appliances for energy efficiency and safety concerns. Keep in mind, home appliance failure is not typically covered by your home insurance and will require a separate Equipment Breakdown endorsement on your home insurance.
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4. Higher-risk entertainment.
Backyard features like pools, hot tubs and trampolines certainly make your home a fun place to entertain. However, have you considered the home insurance costs to cover these higher-risk backyard entertainment features? While you’re in the midst of the home buying process, consider these added costs to your home insurance premium to see if it’s the right fit for you and your budget. Unfenced pools and unnetted trampolines could even lead to your insurer declining to cover the risk.
5. Not having enough home insurance.
It may seem obvious, but not having adequate home insurance coverage can be a burden to your finances in the event of damage to your home or property. How can you be sure you have the right amount of coverage for your needs?
Start by reading your home insurance policy and reaching out to your agent with any coverage questions you may have. Your agent can walk you through the nitty gritty details of your policy like replacement cost vs. actual cash value. Plus, you can walk through hypothetical scenarios to see what your coverage might look like.
Consider adding one or more of these popular coverages to your home insurance policy to better protect your family and property:
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Water back-up coverage
Essential in the event your basement floods from a failed sump pump.
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Underground service line coverage
Replacement coverage for phone cables, internet lines, electrical lines, water pipes and waste pipes that run underground.
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Identity theft coverage
Remediation services to reclaim financial identities and repair your credit.
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Home cyber coverage
Protect your home devices in the event your personal information is hacked.
In general, it’s best to work with your independent insurance agent to make sure you have adequate coverage for your property, or you could end up paying the shortfall in replacement costs.
This article is for informational and suggestion purposes only. If the policy coverage descriptions in this article conflict with the language in the policy, the language in the policy applies. Talk with your independent agent if you have any questions regarding the details of your home insurance policy or if you need to update your insurance.
References:
- Moving.com
- Prestige Homes
- Lifelock