If money is no object, you may not be worried about the long-term costs of owning a new home. However, for most buyers, monthly and annual costs are crucial factors. A house may seem affordable upfront, but unexpected costs can quickly lead to painful budgetary effects. These costs can include repairs and maintenance, but also everyday items such as insurance premiums.
While your potential insurance premiums shouldn't be the only thing you consider when buying a house, they're worth keeping in mind. Understanding how insurers view your house can provide insight into your likely rates. If you don't think your choice of home can substantially influence your insurance rates, check out these three factors that typically influence home insurance premiums.
1. Balloon Framing
You probably don't spend much time thinking about your home's skeleton, but it's an important factor to consider. Unfortunately, it may be hard to determine the underlying construction type if you're in the market for a used home. Depending on the age of the house and the region you live in, one particular issue may arise with balloon framing.
Balloon framing was a common construction style in the early 20th century, although builders stopped using it by mid-century. Balloon framing is cheap and efficient, but the large voids in the walls create a substantial fire hazard. If you're considering purchasing a home that uses balloon framing, you may want to talk with your insurance company beforehand to determine how it may impact your rates.
2. Neighborhood Statistics
Your home's location can impact your premiums almost as much as its physical characteristics. Insurers use complex actuarial tables to determine their rates, and these tables must take relative risk into account. In other words, two homes may be identical, but the likelihood of an owner filing a claim can vary based on each home's location.
Many qualities can make a neighborhood higher or lower risk, and they're not as simple as the local crime rate. For example, a house farther from emergency services (such as fire or police) may have slightly higher premiums. Likewise, it may cost more to insure a house simply because other homeowners in the area have historically filed more claims.
3. Age and Recent Renovations
If you've ever owned a used car, you know they're generally cheaper to insure. With houses, the opposite is often true. Newer homes are cheaper to maintain, more resistant to hazards, and generally safer for occupants. As a result, insurance companies often offer lower rates for recently built homes and new construction. Recent renovations may also help to reduce rates.
Ultimately, your homeowner's insurance isn't likely to be a majority portion of your yearly housing budget, but it can be significant. If you're trying to ensure your new home is as affordable as possible, it's a good idea to talk with an insurance company before purchasing so you can receive an accurate estimate of your premiums.
To learn more, contact a company like Binyon Agency.
After we had kids, we realized that we needed to up the ante on our insurance coverage. While we had a policy in place, I knew that we had to do something to make sure that we were protected in any instance, which wasn't the case at the time. I began talking with different brokers about what we could do to improve our coverage, and they had some really great suggestions that seemed to help. This website is here to help other people to know how to purchase insurance, and what kinds of policies would work best for your special family.