Part 1: Shopping for your home
This post is part 1 of a 2 part series. Part 2 covers the closing process.
So, you are shopping for a home! This is a very exciting point in your life, and there is much to consider in making your choice. While I know that there will be many other important factors that influence your decision on what home to buy, I thought it might be helpful to provide some tips on what you can look for from an insurance perspective. Insurance costs can be quite different from one home to the next, and some homes may be difficult to fully cover – or even to insure at all. There are a number of things you can look for when you are touring houses.
One of the most important things to look at from an insurance perspective is the exterior condition of the home you are considering. Insurance companies are most concerned about the exterior, because it defends the home against the elements of nature. First and foremost, step away from the home and look at the roof on all sides. Do the shingles look fresh and new, or do they look old and worn out or (worse yet) are they covered with moss or lichen, curling, lifting or even broken off or missing? Also look at the siding, fascia and trim. For wood products, is the paint in good condition, or is it peeling, flaking or even rotting? Don’t forget to also look at the condition of any outbuildings, as these also affect the insurability of the home. How condition issues can affect insurance.
Many home buyers prefer a home with an updated kitchen, windows, etc. However, there are other updates you might not otherwise consider that are equally or even more important – both from an insurance standpoint and also because of what future expenses may be right down the road. As mentioned above, ask about the age of the roof. Most roofs installed over 20 years ago need to be replaced, and they are also harder to insure. Another important question is the age of the furnace – newer being better. Lastly, if the home was built before the 1970s, is the plumbing and electrical fully modern? For a further discussion of updates, see this separate post.
There are certain types homes that may be more expensive to insure. For example, many insurance companies won’t insure log homes. Having said that, log homes are beautiful, so you may well be willing to pay a little extra (if necessary) to insure with a carrier who will cover log construction. Also, manufactured homes (singlewides and doublewides), while less expensive to buy, will generally cost more to insure – even if they were installed on a permanent foundation. Also, flat roofs are harder to insure, as there are many insurance companies don't like them.
First, the good news is that you don't need to worry too much about a built-in fireplace, as these typically aren’t a problem for most carriers. However, a woodstove may limit your options and cost more to insure, and you will likely face a challenge if the stove isn't installed properly or isn't UL approved. An even bigger problem is wood heat in a detached garage - quite common in the Northwoods but unfortunately unacceptable with most insurance companies. So if you are thinking about buying a home with a woodstove in an outbuilding, keep in mind that your options will be to remove it, possibly not cover the building at all or to take what you can get from one of the small selection of companies willing to insure it. Outdoor wood boilers are not always as large of an issue, but read my post about insuring these.
Insurance companies worry about safety hazards, because your Homeowners policy will cover your liability if someone gets hurt on your premises. One common hazard is missing railings on exterior steps, decks or porches. Generally, insurance companies want to see railings if the height of the deck or porch is more than 30-36 inches off the ground or if there are more than two or three steps. The good news is that this can often be a fairly easy fix, especially for smaller decks or a short flight of steps. Also, if the home you’re viewing is one of the few in the area that come with either a swimming pool, be advised that most insurance companies want to see a six-foot fence with a self-locking gate – a rarity in the Bemidji area.
Whether your goal is to be as far back in the woods as possible or as near to schools or work as you can get, or even in a particular neighborhood or on a specific lake, I’m sure location will be an important factor in your decision. Keep in mind that distance from the fire department will be a factor in your insurance cost. Within five miles is best, and over ten miles away is least preferred. While remote homes are certainly insurable, you will likely pay 20-80 percent more to insure a home more than five miles away from fire service. This may well be a price you are willing to pay for the location you desire, but it is something to keep in mind.
In summary, whether you are a first time home buyer or a seasoned pro, you have a big decision ahead of you. I hope that this insurance information is helpful to at least carry in the back of your mind as you choose your next home. If I can answer any questions, please contact me. Good luck!
In Part 2 of this series, I guide you through the insurance aspects of the closing process, from the point that you sign the purchase agreement through the day you close.
Ken Cobb is owner of Pine Country Insurance and has been active in the insurance industry for over 15 years. Meet Ken.
Coverage descriptions found in this blog are summaries provided for general educational purposes and cannot fully detail the terms, conditions, limitations or exclusions of a specific insurance policy. Please read your policy carefully.