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Smart Spring Home Buying: Avoiding Insurability Issues

April 16, 2013

home buyingWith spring in the air buying a new home might be on your agenda. If you’re in the market for a house, there are a lot of things to consider when checking out listings. Buyers need to think about more than just square footage, price, and lot size; before you make an offer, make sure your new home is insurable.

What Does Insurable Mean?

Every insurance company has standards for the type of home to which they will extend coverage. Most companies have a variety of policies to suit the different types of homes based on the level of coverage desired but also on the condition of the home. In order to qualify for the best policies available most companies require that a home meet stringent standards, but while there may be a different policy the home qualifies for, some homes may in fact be considered uninsurable.

An uninsurable home is one that does not meet the insurance company’s standards for coverage. This may be because of outdated wiring, plumbing, or other old construction that no longer meets building codes, or because the building has become run down over time. It may also be due to problems on the grounds or safety issues with the home.

In some cases insurability issues are easily repairable, but some may be costly and difficult to fix. Knowing what to look for could save you a lot of money and trouble.

Common Insurability Issues

There are a few issues that are red flags for insurance companies, so it’s important to be aware of them when you are house hunting. Older homes may have more insurability issues than new construction. Be sure to find out what kind of remodeling work has been done on any older home, including any wiring or plumbing upgrades.

Houses in need of major repairs or under construction currently may require a special type of insurance policy. A regular homeowners policy does not provide for the special risks that come with construction.

Homebuyers are often surprised that a pool on the premises can present an insurability problem. Because of the liability risk involved in having a pool, insurance companies have special standards pools must meet in order to be insurable. These can include fencing requirements and other security measures.

It’s also important to look to the landscaping. Trees that are dead or dying represent a danger and may need to be taken down before the home will be insurable. Sometimes these things can happen over the winter and not be noticeable until spring, when they fail to return to life,

Insurance for Special Situations

If you are having a home built or planning a major remodel on an existing property, the home may not be insurable under a standard policy. You will need to take out a special policy that covers you for the liability issues of having workers on the property and also covers the construction materials and equipment during the work.

Once you have completed the work and had the home inspected to ensure it’s up to code and meets the insurance company’s standards, you can switch over to a regular home insurance policy.

In some cases you may need to go to a company specializing in difficult to insure homes to get coverage for your house while it is brought up to standard insurance requirements.

How to Avoid Insurability Issues

The best way to avoid finding out that your new home isn’t insurable after it’s already too late is to have it inspected by an expert prior to signing on the dotted line. While an inspection is a normal part of the home buying process, that inspector doesn’t work for an insurance company, so you may need to specifically ask about insurability issues.

It can be helpful to pass the inspector’s report to your insurance company before you finalize the purchase of the home so that they can look it over for any possible problems the inspector might not have recognized as pertaining to insurance.

Knowing that you have taken care of the insurance before you complete the purchase of your new home gives you the peace of mind of knowing that you are protected and that you don’t have to worry about major, expensive repairs right away in order to get that insurance in place.