Why are some homes hard to insure?

When you're buying a home there can be a lot of details that need attending to in a short period of time. One of those details is arranging for the insurance on your new home and its contents. Mortgage finance companies will insist on proof that you have home insurance in place prior to advancing the funds for your closing. They want to ensure that your investment is protected and without insurance, you may not get a mortgage. This is an awful and potentially costly outcome to deal with at the last minute, so you may want to do some work in advance.

Start out by checking with your lawyer about the existing home insurance on the property. Typically, the home insurance on the property will be cancelled on the possession date, and it's your responsibility to arrange for a new insurance policy. Your lawyer can confirm that this is the case, and that no insurance policy is transferring to you upon closing. Carrying over the home insurance on an older property can be beneficial to you should you have trouble insuring your home, however, if you choose to find a new insurance policy you want to make sure that you won’t be billed for any policy already in existence on the property.

Buyers these days have found that some homes are difficult or expensive to insure due to old or dangerous electrical wiring, older oil tanks and furnaces, and even old roofing. There are many ways to deal with these issues other than spending big money to update, such as getting a qualified electrician to test the wiring. Once deemed to be safe, the house will be insurable. Likewise, testing of older oil tanks and furnaces by your local fuel company will also satisfy many insurance companies and homeowners alike of the safety of the home.

A condition on the home’s insurability that protects the buyer is a good thing to consider for your next purchase. However, not every situation is ideal for conditional offers, and your realtor will be able to advise you on this. Be sure to understand fully the risks of eliminating this clause in your Agreement of Purchase and Sale before you proceed.

How can you be sure that you're getting good value for your money? Leave yourself some time to investigate different alternatives. When comparing one company's quote against another, make sure that you are comparing apples to apples. There are a lot of variables that you should understand and consider when evaluating pricing, such as what is the deductible amount that you must pay before the insurance kicks in, and what the maximum replacement value of the house, the garage, and the home's contents is. How much is allowed for living expenses if you have to live outside the home while repairs are being made? What are the policy's exclusions? Take advantage of the telephone help lines with live operators that many insurance companies have set up to help you understand the fine print in the policies.