Shopping for your dream house? It’s an exciting experience that a little preparation can make even more enjoyable. This checklist is designed to help both the homebuyer and home seller better understand the important role insurance plays in the process.

Even before you start looking for a home, put insurance at the top of your “to do” list. Most lenders won’t provide a mortgage without homeowner’s insurance coverage. And while the cost of insurance is miniscule in comparison with other home buying expenses, some homes cost more to insure than others.

Factors That Affect The Cost Of Homeowners Insurance

• The square footage of the house and any additional structures, such as a detached garage.



• Building costs in your area.



• The physical condition of the home, the type of construction, features (pool, wood-burning stove, etc) and materials used in building the home.



• The frequency of property crime activity.



• The distance the house is to a fire hydrant and fire station, and any factors that might hinder firefighters from extinguishing a fire.



• The condition of the plumbing, heating and electrical systems in your home. These systems can wear out and become unsafe. Recent upgrades make a home safer and less likely to sustain fire or water damage.



• The likelihood of damage due to a disaster, such as a wildfire or windstorm.



• Your demonstrated willingness to fix “wear and tear” problems in previous homes you’ve owned or rented will result in lower rates.



• Your credit history. Many companies offer lower rates to those who’ve demonstrated the ability to handle their finances responsibly.

What Homeowners Insurance Covers 

The typical policy covers damage from fire, windstorm, hail, water damage (excluding flooding), riots, explosion, other sudden and unexpected losses, theft and the extra cost of living elsewhere while your home is repaired or rebuilt.

Your legal liability (up to policy limits) if you, members of your family, or your pets hurt other people or their property.

Your Search Has Narrowed 

You have looked at a number of properties and have narrowed your search to a few homes. We recommend the following:

• Ask the current homeowner for an insurance loss history report. A CLUE or A-Plus loss history report will provide information listing insurance claims that have been reported or filed in the past five years. The seriousness of the loss, and whether the problem was corrected may determine if insurers consider the home a higher risk. Some insurers can also provide, free of charge, an “experience letter” which lists claims filed on the property you’re interested in.



• Have a professional home inspection. The inspector will check the general condition of the home; identify potential problems, and suggest upgrades or replacements that may be needed. A professional inspector will check for water damage and pay special attention to the electrical and plumbing systems, water heater and septic system. If a house has been well maintained, you should be able to obtain insurance coverage.



• Contact your insurance representative. Before making an offer on a home, ask an insurance representative about homeowners insurance.



• Shop for insurance coverage. The cheapest policy is not necessarily the best one. Select a company that provides good customer service, the coverage you need, and has a reputation of paying claims fairly.

Partnering With Your Insurance Representative 

Make sure you buy the amount of insurance you’ll need:

1. To rebuild your home if it’s destroyed by fire or another disaster covered by your policy.

2. To replace your personal belongings.

3. To protect your assets if someone is injured on your property.

Ask Questions

• Discuss different deductible limits. Insurance companies are able to reduce the cost of policies when they are relieved of the obligation of paying for and handling a multitude of relatively small claims which often cost as much to process as large claims. The higher the deductible you choose, the lower your premium will be.



• Discuss inflation-guard and replacement cost coverage for your home and possessions.



• Ask if building code upgrades are covered?



• Do you want sewer and drain back-up protection?



• Seek advice on umbrella coverage if you have assets beyond your policy limits, or if your property has high-risk features, such as a trampoline or swimming pool.



• Ask about policy limits on jewelry, collectibles, computer equipment, and other expensive items.



• Ask about discounts: multiple-policies (home, car or other policies with the same company), smoke detectors, fire extinguishers, sprinkler systems, burglar and fire alarms that alert an outside service, deadbolt locks, plumbing, heating and electrical system upgrades, and wind-and-fire resistant construction materials.



• Discuss home maintenance issues with your insurance company or agent. Generally, insurance does not pay for routine maintenance or damage resulting from neglect or wear and tear.

Resources:

ChoicePoint at www.choicepoint.com

To order a CLUE report, see www.choicetrust.com

Fair Isaac at www.fairisaac.com

To order a credit report, see www.myfico.com

For help with your credit score, call 800-777-2066

Insurance Services Office at www.iso.com

To order a copy of your A-PLUS report, call 800-709-8842

Institute for Business & Home Safety - www.ibhs.org

Insurance Information Institute - www.iii.org

Arizona Department of Insurance - www.id.state.az.us/