Homeowners Insurance: The little things
During the decrease in property values, many people are taking advantage of the low Real Estate Market. In some instances, this may be the opportunity that many families have been waiting for and are buying there first house, or maybe a family/ individual is looking to flip a house for profit. After the house is bought, what do you want to do first? Get homeowners insurance. The importance of homeowners insurance is that it not only covers the house, but also the belongings within the home. More times than not an incident will occur, whether it is catastrophic or minor, that is where homeowners insurance will come into effect. However, many important factors that are important when obtaining a homeowners policy are commonly overlooked when buying a home and can and will increase the premium of your homeowners insurance. Here are a few commonly overlooked factors.
Conditioning of plumbing and electrical- Poor plumbing and electrical may increase the rate of a homeowner’s policy due to the increase in risk.
Flood risk- Flood insurance is not required for most areas; however, it is required if you have a Federal Guarantee Loan or if you live in a high risk flood zone. It is defined that a high risk zone is if the property falls in a greater than 1% annual chance of flooding. Though it is not common, it is still important to do research in the property location.
Fire risk-When talking about Fire risk for homes it for location of home to high risk of natural fires. The distance to these high impact areas will greatly affect the rate or a home and in some cases may be a cause of rejection for a homeowner’s policy. It is important to make notice of these areas when looking for home.
Condition of home/Age of home- The condition and age of a home can play another major factor when obtaining home insurance. Generally, older homes are a higher risk which equates to higher premium for a homeowners policy due to possibility of faulty pluming or deteriorating walls/roof.
Prior Losses- If you have prior losses for your home, it may be more difficult and or more expensive for you to obtain homeowners coverage. When deterring if a loss will affect the rate it is largely based off the amount that was paid out /the size of loss to the home. The more expensive a payout is the premium of the new policy will be more expensive.
All of the above are just a few examples of what Insurance Carriers look at when reviewing a homeowner’s risk to take on. Whatever the condition a home is in, take in consideration that the minor details can play a huge role when obtaining a homeowners policy, however, when you do start look for a Carrier, the most important thing to do is shop around just like any other aspect of obtaining something new.
