Home Buyer's Insurance Guide

14 Things to consider before you sign on the dotted line

Look around for the perfect home? There are many factors to consider before purchasing a home, such as taxes, the school district, the land's desirability and, of course, the bottom line. Don't ignore the financial ramifications of homeowners insurance when calculating the overall value of your home. Check out this guide to aid in your search for your perfect home.

Before house hunting

Be a financially advantageous shopper.

1. Check your credit rating

Having a good credit rating lets you obtain a good mortgage rate, and this may also qualify you for a deduction on your insurance rates. Get a copy of your credit report so that you're familiar with the information it contains. Make sure that everything looks correct, and report any errors immediately. If your credit rating is not as good as it could be, work on redeeming it now.

2. Protect yourself with a renters insurance policy

If you are currently renting a dwelling or home, protect yourself from a monetary liability with a renter's insurance policy. In the event of a crisis, renters insurance can assist with the down payment you're restoring to purchase your new residence, as well as enhance your insurance history for potential homeowners insurers when you ultimately go to check out your first house.

While house hunting

As you look around for a new home, remember not to overlook the property's physical attributes, like its size, location, construction, and current condition, which can influence the cost of your home insurance policy, and, in some instances, desirability features like elaborate architecture or proximity to the ocean. Because certain features may raise your house's insurance premium, consider those attributes as you look for one. When shopping for a home, you should keep in mind the factors listed here.

3. Quality and location of the fire department

Houses that are located near highly rated, permanently staffed fire departments usually cost less to insure. Also, property with a hydrant nearby will cost less to insure.

4. Proximity to the coastline

Houses located within or near the coastline will typically cost more to cover than those further inland. They may also need a separate hurricane or windstorm deductible. In coastal communities, private homeowners insurance may not be accessible. Instead, you may have to buy coverage through the government-backed insurance program.

5. Age of the home

A stately, historic home can be beautiful, but ornate features like plaster walls and ceiling molding, as well as hardwood flooring, can increase the price of insurance. And plumbing and electrical systems may unexpectedly malfunction with age and neglect. If you are considering buying a home that was built many years ago, figure out what it will take to renovate it, so it's both comfortable and safe.

6. Condition of the roof

Repairing your roof supports your family and yourself, and it may even enable you to get a discount on future insurance premiums. Check the roof's condition for signs of damage, and, if yours was made of fire and or hail-resistant material, consider whether a discount is available to you for being safe.

7. Quality of construction

Has your home been updated in accordance with modern-day building codes? Homes well constructed by careful craftsmen and those built to meet contemporary engineering-centric building codes are likely to better withstand the adverse effects of natural catastrophes.

8. Risk of flooding

Flood damage is not covered by standard home insurance. If you are looking to purchase a residence in an area that may be prone to flooding, you will need to purchase separate flood insurance, which is obtainable from the National Flood Insurance Program (NFIP) and certain specialty insurers.

9. History of earthquakes

Earthquakes are most common in California, but earthquakes occur in all states and are usually not covered by home insurance. Earthquake insurance is available from private companies as an endorsement to a homeowner's policy, and from the state of California's Earthquake Authority.

10. Swimming pool or other special feature

Existence of a swimming pool, hot tub, or other special feature at a house will probably trigger a need for more liability insurance. Umbrella liability insurance in conjunction with your regular policy may also be worth considering.

Before you place a bid on the home

Secure the premises, be aware of its current condition, and know what trouble areas may crop up.

11. Check the loss history report

Ask the current homeowner to obtain a loss report from the home. Homeowners can get a Comprehensive Loss Underwriting Exchange (C.L.U.E.) report from LexisNexis, as well as an A-PLUSTM property report from ISO . Both of these reports contain data concerning the property loss, providing valuable data. For example, it's essential to identify the source of the water damage on a home if it had been caused by a burst pipe. On the other hand, a claim for wind or hail that caused a new roof results in a home that's stronger from an insurance standpoint.

12. Get the house inspected

A certified home inspector must execute a home inspection of the house you are interested in getting a mortgage for. This person must be thorough, and you should accompany them to make sure they do their job thoroughly:

• Check the general condition of the home
• Look for water damage, termites and other types of infestation
• Review the electrical system, plumbing, septic tank and water heater
• Show you where potential problems might develop
• Double-check that past problems have been repaired
• Suggest important upgrades or replacements

If your insurance company decides to ask the inspector further questions, so will yours. Make sure to check whether there is a storage tank of underground oil on your property, as many insurers won't provide coverage if the property has one.

13. Estimate maintenance costs

As a homeowner, be sure to estimate any costs you might incur from routine home maintenance, so you can factor them into the cost of owning the property. Any home loss stemming from damaged upkeep is not covered by average homeowners insurance policies.

14. Call your insurance professional

Don t wait until the last minute to think about homeowners insurance and don t feel ashamed of asking for quotes on more than one house. Ask if the house will qualify, obtain an estimate of the price. Keep your insurance policy representative in mind, and it will become much easier. If you are worried about the cost of insuring a certain home, invest in one that matches your financial situation.