Warmer temperatures don’t just cause spring fever.
They herald in the beginning of the annual home shopping season. With more people looking at homes now than at any other time of the year, consumers need to make sure they ask all of the right questions, cautioned the Insurance Information Institute (I.I.I.).
“Along with asking about the property taxes and the quality of the school district, potential home buyers should also consider insurance and maintenance costs, ” said Jeanne Salvatore, vice president, consumer affairs, I.I.I.
To help consumers make an educated home buying decision, the I.I.I. has published Insurance Checklist: A Guide for Home Buyers.
Before putting a bid on a home, find out how much it would cost to maintain the house. Routine repairs and maintenance (such as a new furnace or roof) are part of the cost of home ownership and are not covered by standard home insurance policies, says Salvatore.
It’s also important to ask the owner for a copy of the house’s claims history, such as a CLUE report from ChoicePoint or an A-plus report from ISO.
A home’s loss history provides powerful information to a potential buyer. These reports list the number and type of homeowners insurance claims filed by the current owner over the last five years. A home with a history of water or fire claims may indicate a plumbing or electrical problem that will need to be fixed. A buyer who knows about these costs ahead of time can either negotiate a better purchase price or include it in the calculations of what it would cost to own this particular home, says Salvatore.
Claims data found in a Loss History Report can also provide positive information about a house. A home damaged by a hurricane, for instance, may have a brand new roof which could be very advantageous from an insurance as well as a maintenance perspective.
When shopping for a home, keep in mind factors that will have a dramatic effect on insurance costs such as where the house is located, the type of construction and its physical condition. A home that is located near the coast, for instance, is subject to a separate percentage deductible if a hurricane strikes. These deductibles can range from one to fifteen percent of the home’s insured value, depending on the property’s proximity to the shore.
The I.I.I. suggests that home shoppers consider:
Age of the house
Older homes sometimes have special features such as plaster walls, ceiling moldings and wooden floors that could be costly to replace. Such special features may raise the cost of insurance.
Plumbing, heating and electrical systems
The older the systems, the more susceptible they are to disasters such as fires or water damage. If they have recently been upgraded, however, not only does it make the home safer but more insurable.
Quality of and proximity to fire department
Homes located near a highly rated fire department may pay less for insurance.
Consider the cost of living in a high-risk part of the country. Homes located in earthquake-prone areas, for example, require an additional, separate insurance policy. So do homes located in flood-prone areas. Homes built in densely wooded areas are susceptible to wildfires and they, too, will cost more to insure.
If you are buying a home in a disaster-prone area, find out whether the home is equipped with a hail or fire-resistant roof or impact-resistant window systems or windstorm shutters. Retrofitting your home, including reinforcing chimneys, masonry and foundations may also be a necessity. Disaster-resistant products not only provide greater protection for your home, but may reduce the cost of insuring it.
“Potential home buyers should check their credit history to make sure it is accurate,” said Salvatore. “Good credit can help you secure a mortgage at a competitive rate and, depending on the state and insurer, save you money on your homeowners insurance.”
Additional insurance information can be found on the I.I.I.’s Web site at www.iii.org. Tips to make a home more disaster-resistant may be found on the Institute for Business & Home Safety Web site at www.IBHS.org.
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