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Shopping for a Home? Put Insurance on Your Checklist


With low mortgage rates driving demand and a scarce supply of available homes, many aspiring buyers are dealing with highly competitive markets.1

If you’re searching for your dream home, it’s likely to be one of the largest financial commitments you’ll ever make. Uncovering and addressing potential maintenance issues early in a transaction could help you avoid costly surprises later. Another important factor to consider is the price and availability of homeowners insurance, which will help protect your sizeable investment.

In fact, mortgage lenders typically require proof homeowners coverage is ready to take effect on the closing date, so waiting until the last minute to shop for a policy could cause frustrating or even expensive delays at the close of escrow.

Claim history

During escrow, a seller may provide a Comprehensive Loss Underwriting Exchange (CLUE) or A-PLUS report, both of which provide details of prior claims for fires, flooding, and other events that may have caused damage to the property. These reports could shed light on undisclosed information regarding past or potential problems with the home, some of which could make it more difficult or expensive to insure.

Condition and location

Keep in mind   many insurance companies want to inspect a home before they offer to insure it. Homes with older electrical and plumbing systems could cost more to cover. Properties with damaged roofs, overgrown trees, leaning fences, or other visible issues may also trigger higher premiums. Some problems may have to be addressed during escrow in order to obtain a policy.

You might pay less to insure a home with a fire hydrant nearby, or more for one that’s in a remote location. In fact, some insurers may refuse to write a policy for a home deemed at risk from wildfires or located far from firefighting services, which could make it difficult and more expensive to obtain coverage.

Special policies

Most homeowner’s insurance policies protect against a basic set of perils, including fire, lightning, wind, hail, vandalism, and theft. However, flooding and earthquakes typically  aren’t covered by standard policies. In areas that are documented as flood zones, your lender may require you purchase a separate flood policy. If your home is located in an area subject to flood or earthquake risk, it’s a good idea to secure additional coverage that could help protect you (up to the policy limits) from a total loss if disaster strikes.

Cost consideration

If you can afford to pay a higher deductible on a claim, increasing your deductible from $500 to $1,000 could reduce your premium. Installing safety features such as deadbolt locks, smoke detectors, and monitored fire and burglar alarms may also lower insurance costs. Before you commit to purchasing a property, it might be wise to consult your insurance agent for a quote and to discuss any unusual circumstances that might affect your coverage.