Insurance tips for prospective homebuyers

If you’re in the market for a new property, there are a few things to watch out for which relate to the potential insurance risks. The type of property you're interested in buying could greatly impact your home insurance premium. 

Below, we’re going to review some things to keep in mind when you’re looking for that forever home. These tips can keep your insurance risk low and hopefully reduce your bill.

Location

Yes, buying a home can come down to ‘location, location, location!’ but that ‘location’ will always have insurance associations.

Is there a history of theft, vandalism or flooding in the neighbourhood? Checking online or asking some friendly neighbours can provide some insight. Your real estate agent may also be able to answer some of these questions.

Your insurance premium will reflect the risk of your neighbourhood.

Proximity to help

Where is the closest fire station to your (potentially) new home? Will it take emergency services a long time to arrive and help put a fire out if it happens?

The further you are from help (usually with fire), the more your property is at risk for total loss.

Determining how quickly a fire could be alleviated will be factored into your insurance premium. Locate the fire hydrants on the street and find out where the closest fire station is.

The home’s replacement cost

This is different than the market value of the home.

The size and construction of the home will determine how much it will cost to replace its structure and contents. Valuations on the roof, flooring, walls, and counters will come into play here, along with the value of personal property inside the home.

What needs to be insured?

Along with insuring the home itself with homeowners insurance, you need to look away from the home too. Factor in detached buildings, garages, long driveways or built-in swimming pools. These things can affect your premium.

Make a list of any expensive belongings so you can understand how much contents coverage you may need. Take pictures of valuables as you’re moving and try to keep receipts.

How much coverage will you need?

By looking at the inventory of your personal belongings plus the replacement value of your home (the cost to rebuild the home from scratch), you’ll be able to see an overall cost of protection from an insurance perspective.

There are certain things that make you riskier to insure (and more likely to file a claim) such as the location of your property and particular features of it, such as a fireplace or swimming pool.

Talk to a financial advisor, real estate agent or insurance representative for more information on insurance risks and replacement costs in case you find yourself in trouble.

If the home is looking like too much of an insurance risk, consider another option.