Purchasing a home can certainly be an overwhelming, emotional, and stressful process. Whether you are a first-time homebuyer or not, it is understandable to not know all the ins and outs of buying a home. However, there are a few things you may want to be aware of to help you throughout the home-buying process. This includes major red flags which may not only include costly and aggravating fixes but may also have a major impact on your home insurance premium. Here are a few examples:
The Neighborhood
Finding your perfect house in the wrong neighborhood can be quite a disappointment. Be sure you take some time to drive around to check out the neighborhood to make sure it is safe. If you have children, it is important you find a home in their desired school zone. Be sure to take note of the surrounding areas should there be water nearby, if the home is located on a busy street, etc.
Insurance Impact: If your new home is located within a gated community you could receive credits towards your premium. Should the home also be nearby water, it is important you purchase flood insurance to be covered in the event the waters rise.
Renovations
A few simple and easy DIY projects to make the home "yours" can be quite simple and inexpensive. However, should the house need a full remodel of a kitchen or bathroom it can average around $10,000- $20,000. If you are planning on making an offer on a fixer-upper, be sure to calculate the price of these renovations into your budget.
Insurance Impact: Should you decide to make major changes or additions to your home, you could be underinsured. It is important you provide your insurance agent with the information on the renovations to your home as soon as possible, so your insurance policy can be updated to ensure you have adequate coverage.
Make Sure the Home Has "Strong Bones"
Most home buyers aren't looking at the foundation or the roof of the home at first glance, but these areas should not be overlooked. If the tile roof has not been completely replaced in the last 25 years, or the shingle roof in the last 15 years, a replacement is in the future. The cost of replacing a new roof can set you back anywhere between $5,000 to $15,000. As for the foundation, major cracks could indicate larger issues and could cost tens of thousands to fix. It is also important to take a look at other systems included in the home such as electrical, sewer/septic or well, and HVAC as all these systems can be costly to repair or replace.
Insurance Impact: The home may be ineligible for coverage should the home have major foundational issues. If your new home features a newer roofer, a Wind Mitigation Form should be completed by a licensed inspector to show your home possesses certain characteristics to limit damage from wind. Once this form is submitted to your insurance carrier, you could be eligible for wind mitigation credits towards your premium.
Look for Damages
Although homeowners should always have a thorough home inspection done by a licensed inspector prior to closing, you should be looking for damages around the home from the first look. Water damage can pose a larger problem within the home, be sure to check ceilings and walls for water stains. Take a glance at the pipes in the laundry room and bathrooms for leaks.
Insurance Impact: Water damages can cost thousands, and should it be determined the damage is caused by everyday wear and tear or lack of maintenance it may not be covered under your homeowners insurance. Consider inquiring if the previous owner has had a history of filing insurance claims on the property. As a condition on the sale, you can request a C.L.U.E. report which will list the losses reported to insurance companies for the property.
As a homebuyer, it is very important for you to be well informed about the potential features and pitfalls associated with a home before closing. Another important thing to note, before closing, your mortgage lender will require you to purchase homeowners insurance. Just as you did your due diligence and research on finding your home, you should do the same when finding a home insurance carrier. Speak to your agent about obtaining homeowners insurance with Edison Insurance Company. We provide quality and customizable coverages at competitive rates. Edison Insurance Company also has an "A Exceptional" Financial Stability Rating ® (FSR) from DEMOTECH, INC. and are backed by only "A Rated" reinsurance companies. We offer homeowners and condo owners insurance as well as flood coverage as a certified endorsement, eliminating the need for a standalone flood insurance policy. To learn more about us, or to obtain a quote, contact your agent, or call us at 866-568-8922.
