When you buy a house you should consider many factors that influence on its insurance cost to decrease your expenses. The thing insurance is something you have to pay for always on monthly basis which means that you need to consider it as a part of your investment policy. It has to be considered along with mortgage a house overall price. Using such an approach you will find out that it is sometimes more profitable in long-term prospective to buy a more expensive house if its insurance expenses and coverage are more adequate to sale price.
Factors to Consider for a House Buyer
Before buying a house it is a good idea to check up your credit rating – it either affects the interest rate and other loan terms and insurance costs. After this is done make sure you understand that size and price of the home are not only factors to consider. It is important to check the geographical location of the house – for example, how it is from the coastline where natural disasters happen usually.
For some regions that are estimated to be of high-risk you only can get an insurance using state-run programs. For other close to coast houses you will have to pay hurricane or windstorm deductibles which makes buying a house near to coastline much more expensive to pay for when it comes to insurance.
Neighbourhood plays a big role when calculating insurance risks. The better is neighbourhood the lower is the modificator rate affecting insurance costs. For example, if your house is located near the high rated fire or police department you will gain positive effect when insurance company calculates monthly payments. Moreover low or high crime rate in the neighbourhood count as well.
When estimating house inspector evaluates its:
- interior and exterior
- roofing and flooring
Age of the house impacts insurance costs dramatically. However, when talking about age the materials house is made from are taking into consideration as well. The more reliable materials were used when building a house the less is the impact of the age.
Interior and exterior is estimated for price, size, and factors that may impact worsening of the house overall reliability. This is rather controversary as the better your house is looking the higher as the price, monthly payments and coverage as well. However, the more reliable and renewed your house looks like the less are the monthly payments.
Roofing and flooring is evaluated separately on fire resistance, reliability and other weather or tire factors. Renewing roof may decrease insurance costs and be a good investment in the long-term prospective.
It depends on the number of insurance collisions you include to the contract, but if robbery is in the list the reliability and quality of the security system installed in counted, too.
The more there are facilities in or outside of your house the more liabilities you need to count when contracting for insurance. For example, swimming pool or playground on your land near the house increase coverage and payments as well. You also may need umbrella liability insurance to make sure your expenses would be covered if someone gets injured and sues you using your facility.
Natural Disaster Risks
Along with hurricanes there are other natural disasters you can get insured from like:
- volcanic eruption
Usually in regions that tend to be risky when it comes to natural disasters there are special disaster coverage programs which means that you get covered either by government run programs or specialized insurance companies.
To avoid buying house in risky regions you can get documents like earthquake history report and other associated documents. All of those affect insurance costs dramatically.
House Inspection and History Before Insurance
In order to make sure you and insurance company knows everything about the home you buy you need to obtain a loss history report on the house purchased and also get it inspected before the purchase being done.
Loss history report (or C.L.U.E. report) is an official document where all the losses associated with the property are screened. This is a vital document for evaluating house reliability as it provide full information on house for the past five years. The copy of the report can be obtained for free once a year. The report is provided by LexisNexis online.
This report allows you to find out whether there are unsolved problems in your house with pipes or material exhaustion or any other problems.
When you get a mortgage the house has to be inspected on whether there are problems arisen. The better are the results of the inspection the less there would be groundings for insurance company to rise the monthly payment.
Inspection also allows you to calculate future house maintenance costs and include these figures to your investment checklist to evaluate purchase house as an investment properly.
Insuring house is a must and in order to make a right choice on a house to buy make sure you have encountered all of the mentioned above. By the way, life insurance is none of the less important.