Below is a great article from the 2012 Winter edition of “Amica today” about things you should consider when buying home owners insurance for your new home.
Buying a new home?
Remember these tips about homeowners insurance
Purchasing a new home can be exciting,frustrating and overwhelming. With so many details to look for and questions to ask, we don’t want you to forget about your homeowners insurance. So we’ve compiled a list of things to consider to determine if the home is a good (or more costly) insurance risk.
Start with the basics
It’s a good idea to compile some basic information about your home and keep it handy. You’ll need to know the answers to these basic questions to determine the home’s insurability:
- When was the home built?
- How old are the plumbing and
- What type of roof?
- What’s the square footage?
- Have there been any losses?
- Where is the home located?
Other factors to consider
When searching for a new home, you probably already have a location and style in mind. But remember that these choices and others can affect the cost of your homeowners insurance.
“We have customers call us all the time when they’re thinking about buying a new home, and we encourage them to do this,” said Bryan Cook, senior assistant vice president in sales and client services. “We can give them
estimates on insurance for homes in different areas or homes of different types so that they can compare costs.”
Here are some important factors to consider:
• Check on the location of the closest fire department and hydrants. Homes located in areas with highly-rated fire protection usually cost less to insure.
• Those who want ocean-front homes are well aware that cost and avail- ability of insurance may be an issue. That’s why it’s important to look at all the variables – deductibles, discounts and building codes can all affect insurance costs.
• Research the flooding history in
your new home’s neighborhood
and the proximity of flood hazard areas. Standard home policies do not cover water damage from flooding. Flood insurance is available only through the National Flood Insurance Program, so it’s a good idea to learn more about the limits and coverages.
• A house inspection should uncover any issues that aren’t readily apparent: water damage; any infestation; potential problems with electrical system, septic tank or water heater; and suggested upgrades or replacements. It’s always a good idea to have an inspection done.
• Swimming pools, hot tubs and other special features are great, but be aware of the risks and the need for liability insurance.
“Today, there are more accidental deaths due to swimming pools than from hand- guns. So it’s very important to be aware of the risks involved and to make sure safeguards are in place,” said Cook,
who also serves on the board for the Insurance Institute for Business & Home Safety (IBHS).
Market value vs. replacement value
Due to upheavals in the mortgage market over the past few years, Cook also urges home buyers to make sure they understand the difference between the market value and the replacement cost of their homes.
Market value is the price you paid for your house and land or the approximate value of your home in a specific area. Replacement value is how much it will cost to rebuild your house in the same spot, same size and same quality of construction at today’s costs.
“These can be, and most often are, two completely different numbers,” said Cook. “Home insurance premiums are based on the replacement value of your home. People might think that if the market value of their home goes down, so does its replacement value, and that isn’t correct.”