If you are like most of us, much of your shopping is done in a totally impulse fashion; I was thinking about buying a car to replace my old Jeep, and I ended up with a Porsche. That’s pretty standard for me, but there are some times you should consider using a little more forethought than I. One of those times is when you are buying a house. Obviously you know what you are looking for, and your price range, but most people do not consider their homeowner’s insurance when considering making an offer on a house. I’m not saying that the cost of home insurance should be the only factor in your home buying decision, but there are some factors that you should consider before writing your number on a scrap of paper and passing it over to the realtor brokering the sale.
1. What is the home built of? Generally, you have two choices here; wood or brick. Obviously, due to fire risk, wood is the more expensive of the two types to insure. Part of the reason is because wood is a greater fire hazard, but also because wood houses tend to be older. Mix together one house that is more inclined to burn and an old fuse panel, and you are looking at a big risk for the company writing that homeowner’s insurance. This is not a hard and fast rule, but you can bet that insurance on a home with wooden siding will be more than a comparable brick home.
2. How old is the home? New homes are built differently than older homes. Sure, some people say that newer homes are made of cheaper materials like press-board shelves, but overall, they are better constructed than older homes. A new home will be built to far different codes that make it safer, less likely to catch on fire, and generally much more secure. All of those are things that make a claim less likely to happen. Insurance companies would prefer to never have claims, so a new house will cost less to rebuild than an older house. Part of the reason for that is that the older house will have to be brought up to code, and that costs much more money than simply rebuilding and repainting. I’m not telling you to stay away from older houses (except mine – keep off my lawn!) but I am telling you to be sure and talk to your home insurance agent about insurance pricing before you make the decision.
3. What kind of roof does the house have? Here in Dallas, one of the biggest risk that homeowners face is hail. In 2012, we had billions of dollars worth of hail damage that insurance companies had to pay out on. Be sure to ask about what kind of roof is on the house, and whether it is hail resistant or not, and what kind of shingles it has. Some houses have a metal roof, which is great if it is hail resistant (not all metal roofs are). Ask if the house has a hail resistant rating, and if so, make sure you get a copy of the certificate. If someone tells you it’s hail resistant, that’s great – but the insurance company is going to want some proof before you get the discount. Be sure and ask the same question about any house you look at. There are many types of hail resistant roof styles that look like regular asphalt shingles. Most of all – if someone says “yes”, get the proof for a serious discount on your home policy.
4. Is the house in a flood plane? Here at The Phoenix we work with lots of people buying homes; generally they don’t find out that they need flood insurance until the mortgage company tells them it is required. If a house requires flood insurance, it can double the annual insurance cost, which is quite a shock to most people. Truly, this is probably the best advice in this article: ASK IF THE HOUSE IS IN A FLOOD ZONE BEFORE YOU MAKE AN OFFER. If it’s in a flood zone, that doesn’t mean that you shouldn’t make an offer, but it certainly means that your insurance cost will be higher. There isn’t any way around it, and there are no “deals” on flood insurance.
5. What kind of crime rate is there? Lots of people check the crime stats in an area when looking at houses, but they look at the number of sex offenders (mostly because that’s easy to find) and don’t look at property crime. While I’d not recommend buying a house that has registered sex offenders on four sides, I’d look a little more closely at the number of burglaries and vandalism reports in the area. If your new house is in an area where houses get broken into a lot, the insurance company is going to know that, and you will pay accordingly. Take a closer look at ALL types of crime in an area, and consider how it can affect your rates.
While this isn’t a comprehensive list of the items you need to consider when buying a house, it is a pretty good list of things that most people don’t think about, and are usually not told by anyone else involved int he transaction. Remember, the Seller wants to sell, both Realtors want you to buy, but The Phoenix Insurance just wants to educate you, and make sure you are properly protected, and are not pay too much for your homeowner’s insurance.