Important Points to Consider when Obtaining Homeowner’s Insurance

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You would be amazed how many people have come to me over the years with an insurance issue affecting their home. Whether it was a case of coverage being denied due to a lapse in the policy or insufficient coverage to replace valuable antiques and other items destroyed by fire—it is alarming how many people have not properly addressed their insurance needs. Whether you are buying a new home and need insurance—or you are reviewing an existing policy that is up for renewal—here are some tips to make sure you will be protected!

BEFORE YOU START LOOKING FOR A HOME

  • Check your credit rating: Having good credit may assist you in obtaining a more favorable rate on your insurance. Apply online for a copy of your credit report from Equifax, TransUnion or Experian and immediately report any mistakes.
  • Review your home insurance claims-filing history: You can obtain a record of prior home insurance claims that you have filed by obtaining a CLUE report from ChoicePoint or an A-PLUS report from Insurance Services Office (ISO). You can expect a lower insurance premium if you have not made prior claims or have an insignificant history of prior claims. If you have not filed a claim within the past five years, then you won’t have a loss history report.


WHEN LOOKING AT NEW HOMES OF INTEREST

The characteristics of your home, such as where it is located and how it is constructed, will directly affect your premium. Here are some other factors that will also come into play:

  • Construction materials of the home: If you are planning on living near the ocean or in an active hurricane region, you may want to purchase a brick home that is more resistant to extreme elements. For properties located in areas that are prone to earthquakes, floods and severe storms, it is recommended to buy newer homes built in compliance with current codes or older homes that have been bolted to their foundations.
  • Age of the house: Older homes that contain plaster walls, wooden floors and ceiling molding can be costly to repair. These unique features can raise the cost of your insurance. Older homes that have been remodeled or updated to comply with current building codes are typically less expensive to insure than older homes which are out of date.
  • Safety devices: Significant discounts in insurance may be available to homes that are equipped with smoke detectors, burglar alarms, fire alarms and dead-bolt locks.
  • Condition of the roof: Insurers are attracted to properties that have a newer roof in good repair. This will be a money-saver on your premium.

    YOU HAVE DECIDED ON A HOME

    Now that you have selected the home you want to purchase, you need to maximize the value of your premium by considering the following:

    • Select the highest deductible you can afford: A higher deductible will yield a lower premium. Over the long-term, you will save money and maintain insurance for when it’s absolutely necessary.
    • Inquire about discounts: Ask your insurer about discounts for smoke detectors, fire extinguishers, burglar and fire alarms, multiple policies with the same company, electrical systems upgrade and sprinkler systems.
    • Obtain enough insurance: It is absolutely necessary to have enough coverage to completely rebuild your home in the event it is destroyed, replace all personal contents within your home and insulate you from liability in case someone is injured on your property.

    Most importantly, keep your insurance current. Always, let your insurer know about alterations, additions and improvements to your home as these may affect your premium and coverage.

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3 Comments

  1. I have a number of clients that ask me about insurance, and this is a great article to refer them to. I think that for most people it is always a preference as to whether to pay more monthly and less of a deductible, or vcice versa.

    Rick Marnon, Howell

  2. I would just like to add – it would also be useful if one gets a home disclosure report before buying a new home because this could affect its insurance.

    If he plans to buy a new home, he should be aware of the importance of getting a home disclosure report from his agent or the seller’s agent. This gives him a sufficient knowledge about any problems the property has had early on. Problems like water damage and any indication of property structural defect could make it impossible for him to get coverage.

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