Buying a house? 4 Important Insurance Considerations
You’re ready to buy a home: You’ve been pre-approved for a mortgage, researched school districts and you have found the house that’s perfect for you and your family.
Is it time to make an offer?
Not quite yet: Take a few minutes to investigate the insurance implications. Insurance is an ongoing homeowner expense, so it’s important to make sure that you evaluate insurance implications when making home-buying decisions.
Here are 4 important insurance considerations when purchasing a home:
1) Do some investigation – There are several factors that typically affect the price and perhaps the availability of insurance for a home:
- Proximity to the coastline or floodplain and risk of flooding
- History of earthquakes or hurricanes/tropical storms
- Quality and location of the nearest fire department
- Age of the home
- Whether the home is well-built and up to code
- Condition of the roof
- Swimming pool or other special features
Before you make an offer –
2) Get a CLUE – It’s important to learn about prior claims on the house. Prior claims are not necessarily a barrier to securing insurance. In fact, sometimes it may be good news — for example, the roof was damaged by a tropical storm and replaced with a new one.
Ask the current owner for a copy of the insurance loss history report, such as a Comprehensive Loss Underwriting Exchange (C.L.U.E.) report, or an A-PLUS™ property report from ISO, a source of information about property/casualty insurance.
- For information on how to get a free claims history or C.L.U.E. report from LexisNexis -see www.lexisnexis.com/risk/factact
or call (866) 312-8076.
- For information on how to order a free A-PLUS report from Verisk ISO, see http://www.verisk.com/underwriting/how-to-order-your-free-a-plus-loss-history-report.html or call (800) 627-3487.
A record of insurance claims on the house can provide answers to two important questions:
- Have there been any past problems in the home?
- If damage occurred, was it properly repaired?
If there has been a loss we highly recommend that you obtain copies of paid invoices from the repair. This will confirm repairs were made as well as who completed them.
If the home has been claim-free for five years there will not be a loss history report on the property – also good news!
3) Get the house inspected — The inspector should:
- Check the general condition of the home, including the roof condition. BE SURE to secure an inspection service that does on roof inspections. It is very difficult if not impossible to see shingle condition and hail strike damage from the ground.
- Look for water damage, termites and other types of infestation.
- Check the electrical system, water heater and septic tank, if there is one.
- Show you where potential problems might develop.
- Make certain that any past problems have been properly repaired.
- Suggest upgrades or replacements that may be needed.