03/11/2024
If youâre a homebuyer or realtor in this market - this post is for you! đĄ I have a few insurance things you should consider before putting an offer on a new place, or listing a property.
The insurance market is not the same as it was 5 years ago, and houses can have characteristics that can really mess you up from a pricing or coverage standpoint.
When interest rates (and payments) are higher than they have been, things like high home insurance can affect a deal. Remember, your payment is P&I, Taxes, and insurance, (assuming you escrow).
Mess with the payment, you mess with the buying power.
4 things to pay attention to;
1ď¸âŁ Roof Age - insurance companies have been getting slaughtered on roofs for years now - but they are changing that. If youâre looking at a house with a roof greater than 10 years old, youâre going to start seeing limits on carriers willing to write your home. (Less competition = higher prices) More than 15 years old and you start getting into limited carriers AND coverage limitations. 20 years oldâŚyeah good luck. 𤣠Negotiate a roof replacement into your deal.
2ď¸âŁ Fire Protection Class - carriers use to care about this a lot, then they stopped caring as much as- but now they do again. This is the rating of the quality of the responding station to your location. Scale is 1 - 10, 10 being âif youâre houses catches on fire itâs burning down 100%â and 1 being âoh I live in Murfreesboro.â đĽ This rating factors into your rate with most companies, and we are seeing restrictions placed on the higher class (8-10) or huge surcharges because of it. Be weary of location. In city limits usually gets city fire, outside gets county (volunteer firefighters possibly).
3ď¸âŁ Age of the Home - this is going to seem strange, but there is currently a âno manâs landâ in getting low home insurance rates. We see this on houses older than 20 years old, but less than 30 years old.
Now Iâm not saying that you canât get insurance, thatâs not what I meant at all. But if you fall in that zone - youâre going to see overall higher rates than you would think. Reason being is those homes are âtoo oldâ to be considered new, but not old enough to have had major systems (hvac, plumbing, electric, roof) replaced yet and loss frequency is higher on them.
4ď¸âŁ Precentage Deductibles - now these are not going to affect you getting a house, but they will affect you down the road. A lot of carriers are switching to these, and you as the buyer need to be aware of what you are signing up for.
Now full disclosure, some people can afford a % deductible and in those instances they are fine. But what I donât like, is people hear a precentage and the deductible âseemsâ less.
Example - you have a 500,000 home - which is a lower deductible, $2500 or 1%?
Well if youâre not paying attention, 1% seems like it should be less, but in reality that $5,000. Carriers are doing up to 5% deductibles. Think about that.
So if you see a % deductible, make sure you understand what you are signing up for. Nothing is worse than discovering your deductible is higher than you thought - after youâve had a claim. đ¤ˇââď¸
Hope this help! Happy home buying! đĄ