Without a doubt, buying a home is one of the biggest purchases you will ever make and home insurance goes hand in hand with that purchase. There are a variety of factors that influence your ability to receive a favorable premium. Here are some key factors to keep in mind:
Your home’s location
The housing market in your area will affect your home insurance premium. For example, in Florida (where hurricanes are frequent) you’ll have a different premium because the location poses a different sort of risk to your home.
Construction of your home
The way your home is built may affect your home insurance premium. If you have older materials, you might have to update them before you can insure. Here are some things to look out for:
- Outdated wiring – knob and tube wiring may be more exposed creating increased fire danger
- Galvanized steel pipes for plumbing – older home often include galvanize steel pipes that could rust which means leaks and flooding
- Storm-sensitive roof – an older roof may be more susceptible to hail, wind and other damage
Make sure you take a close look at a house’s construction before you decide to buy it. Then you’ll be able to figure out what updates are needed and how that may affect your home insurance premium.
Home replacement costs
The real estate market fluctuates meaning what your home is worth now may not be what it will be worth in a month. Using the just the price you paid for your home to determine the costs to replace your residence is insufficient.
You’ll need a professional home appraisal to determine what it would cost to replace your residence. Then you’ll be able to insure it accordingly.
Standard home insurance policies don’t cover flood damage. You’ll need flood insurance to supplement your standard home insurance if your house is in a flood zone. But keep in mind that your home doesn’t need to be in a flood zone to be susceptible to flooding. Even a few inches of water can cause mold and other damages.
Your home may have potential liability hazards that can raise your premium or make it more difficult to insure your residence. Some common hazards include animals, swimming pools and trampolines.