When it comes to totaling up the expenses that go along with owning a home, many first-time home buyers may forget to add in the cost of home insurance, which can be quite steep. So if you’re buying a home for the first time, don’t make this costly mistake. As you look at potential new-home candidates, look for certain features that will make the home more affordable to insure; paying a bit more money for a home that gives you better insurance rates will most likely save you money in the long run, so be sure you understand the basics of home insurance, and do the math before you buy.
What it Covers
Like any other type of insurance, there are different levels of home insurance coverage. At its most basic, home insurance will help you cover the costs of rebuilding your home if you lose it to certain types of disasters, and it will pay for damages related to break-ins. However, the important thing to look at with any type of home insurance isn’t what it does cover but what it doesn’t cover. Some types of home insurance, for instance, won’t cover flood damage, although almost all home insurance will cover fire damage.
So before you sign on the dotted line, make sure you understand what particular risks your home has. For instance, if it’s in any kind of low-lying area, there’s always a chance that you could deal with flooding, even if the area hasn’t been known to flood on a regular basis. The damages of such a disaster can be financially devastating, so you need to be sure you know what your home needs to be covered for and what type of insurance coverage you need. Buying the cheapest, most basic home insurance policy will end up costing you money if something expensive happens to your home and your insurance policy doesn’t cover it.
Location and Construction
One way to save money on home insurance before you even buy a home is to consider location and construction. Obviously, no one wants to buy a home in the most crime-ridden part of town, but it’s best to talk to an insurance agent about the areas of your town that are most prone to break-ins. You may be quite surprised to you’ll find that homes in these areas will have higher insurance rates.
Also, different areas even within the same town will have differing prices on home insurance coverage based on other risks, such as flooding or earthquakes. If your home is in an area that has been known to flood, you’ll pay more for insurance than if you pick a home that sits on higher ground. Again, this information is something that a local home insurance agent will know, and you may be able to save a lot of money by simply asking around about the best areas of town as far as insurance rates go.
Construction is important as well. Brick homes are more expensive to buy than wood homes, for the most part, but they’re cheaper to insure. Other considerations that play into your home insurance rates are the number of stories on your home and the type of basement it has.
Once you get your must-see home list narrowed down to a few that you really like, you should consider calling up a local insurance agent to discuss possible rates on different homes. Everything from the price of the home to the factors we’ve discussed will impact your rates, and it certainly never hurts to ask how your rates will differ from one home to another.