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Tuesday, June 3, 2014

6 Things to Watch Out for That Can Affect the Cost of Your Homeowners Insurance

Insurance companies are charging more by the year and they are constantly looking for different faults to increase your premiums.  Don't make the mistake of buying a home only to uncover that an old leaking roof may make your home too expensive to insure. 


I think most home buyers would agree that insurance isn't usually on the top of their to-do list when buying a home.  The focus is usually on the fun part like what neighborhood you want to live in and shopping for homes.  But keep in mind that homeowners insurance is part of your monthly mortgage payment so high insurance premiums could affect your ability to qualify.  

Start shopping for homeowners insurance early in the process.  Consider bundling with your auto insurance and comparing quotes for more savings.  With some negotiation and persistence you can save hundreds of dollars a year on homeowners insurance.  

Below are 6 factors that can make a big impact on the cost of your insurance according to what we've seen in the past.  After studying up on these make sure to speak with your insurance agent and make sure you feel comfortable with the quote before preceding further into the home buying process:

1. Check on the plumbing

I'm sure you can imagine that if you're plumbing is a quarter of a century old, it will raise concerns and could increase your insurance premiums.  Water claims can be some of the most difficult and hazardous to deal with because they can lead to mold and other very costly matters.  

Some of the time it might be worth the difference to repair some pipes and have a little bit of work done. However, often times you can negotiate items like this with the seller or get them to lower the purchase price of the home.  

2. Hurricane, mudslide, wildfire, flood, or other natural disaster zones

Natural disasters are one of the most expensive liabilities for an insurance company and that's why many refuse to provide coverage for such matters.  If your home is in a high risk area you might be forced to go with a smaller insurance group which can charge up to three times more than your regular insurance company.  

3. Roof Condition

Like we said before, the condition of the roof absolutely does matter.  If the roof has not been updated in 20 to 30 years there is a good chance you will have to settle for a smaller, higher-risk insurance company.  

Quite the opposite effect takes happens if the home you buy has a newer, high quality roof.  A lot of insurance companies actually offer a discount for a newer roof.  Ask your insurance agent beforehand if they offer such a discount.  

4. Where is the nearest fire department?

Believe it or not, a lot of insurance companies offer a discount if your home is closer to a fire department as well as a fire hydrant.  Other insurance companies look for the amount of fire claims in other nearby homes.  

5. The newer the home the better

It makes sense that the newer the home, the less likely chance of any needed repairs.  There are pros and cons to buying new but one of the pros is definitely a lower premium on a newer home.  Not only do you have the assurance of knowing that your home meets all of code but you'll save money monthly as well.  

6. Home security

Is your home in a gated community? Or does it have an alarm system that auto-dials the police when there is a break in? If so, you might quality for a discount between 5% and 15%.  Similarly, if you live in a gated community or one with high security measures you might be eligible for a discount.  

Have you had any other experiences with your home that either increased or lowered your homeowners insurance? Share your tips with us by leaving a comment below!

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