Buying a house can be one of the biggest decisions of your life. Between deciding if you can afford it, if it is in the right location, if it is the right time to buy, the condition of the house, etc etc. The list can go on and on. While we can’t help you with the financing aspect of the home, we can offer some advice on insurance considerations to look out for before purchasing a home.
Here’s a few things to consider:
Age – Although there is nothing wrong with older homes, they tend to more expensive to insure. The building techniques were different back then, which makes it more expensive to fix after a loss. Features such as plaster and solid brick typically don’t exist in newer homes, and there are fewer bricklayers and tradesmen qualified to repair these homes than there were 100 years ago. Also how much the home is updated can play a big role in the cost of insurance.
Updates – Insurance companies like to see houses that are updated including the heating, plumbing, roof and electrical. These four things are the main updates insurance companies look for in a home. A furnace from 1950 will be very difficult to insure. So what else do they want to know?
Heating – Most newer homes today are heated by either a natural gas or propane forced air furnace. These are the preferred heating sources for homes – but there are many different types out there. Things such as heat pumps, electric furnaces, combination furnaces, outdoor furnaces, oil etc etc. When purchasing a home try to look for one with an updated furnace, as this will make it much easier to obtain insurance. Ideally it will have been updated within the past 10 years, but up to 20 years old is typically acceptable. Oil furnaces are typically surcharged and insurance companies have very strict guidelines regarding the tanks. This is due to the large number of oil tanks that have leaked over the years. The other main concern for insurance companies are wood and/or pellet stoves. These must be WETT certified before they will be considered. You have to be careful as the WETT certification requirements do change, so a wood stove installed ten years ago may not pass today.
Roof – This one is fairly straightforward as roofs that need to be replaced tend to be quite obvious even if you are not a professional roofer. Shingles typically last up to 20 years, but each type of shingles have a different lifespan. It is a good idea to check with your home inspector if you are not sure. Steel roofs last much longer, but are much more expensive to initially install.
Plumbing – As long as your plumbing is copper or ABS you typically should be safe. The things to avoid are cast iron or galvanized as they can crack and cause significant damage to your home.
Electrical – The safest electrical setup for insurance purposes is copper wiring with a breaker panel. Fuse panels are usually acceptable, but not preferred. Things to avoid are aluminum and knob & tube wiring. Aluminum is considered OK if you have an ESA inspection done, but knob & tube must be replaced immediately as it was never made for the amount the appliances, lights, computers etc that we use today. It would also be very old at this point, and prone to cracking.
Location, location, location – An important consideration depending on your lifestyle it also matters for insurance. Is your home in a city? Close to a town? Far in the country, away from everything except the deer in the forest? Insurance companies see all the above and more, but depending where you live it may cost you more. Having a hydrant in front of your home is ideal, with a close radius to the fire hall. Living further than 13 km away from the fire hall usually means increased cost as it takes the firefighters longer to get to your residence to start fighting the fire. Living near a big lake might be nice, but it may also mean it is harder to obtain flood insurance.
Size – Insurance companies indirectly charge you based on the size of your home. A larger home typically costs more than a smaller home to rebuild. Of course the fit and finish of a home can also have a large impact.
Shape and uniqueness of home – We all like to be unique, but this can drastically increase the cost of insurance for your home. Basic homes cost less to insure because fixing them is typically easier. Building material also plays a role, as wood frame buildings cost a lot less than brick buildings to rebuild. Also remember insurance companies do not insure your land – they only insure the buildings on it. We are often asked why someone’s home is insured to a certain value, and the answer is that it is an estimated rebuild cost of your home, not of the land.
Use of house – Will it be rented out? Will there be a business run from the home? Will it be used as a farm?
Features of the Property – Is the property located on a lake, river or pond? Do you have a pool? Solar panels?
Odds and ends – The last critical part is common sense – how does the home look? Does it look like it has been well maintained? Are there cracks in the foundation? Is the home neat & tidy? Insurance companies do consider the overall appearance of homes, with well kept homes much easier to obtain insurance for.
If you are looking at purchasing a home please give us a call 905-623-4406. We can help tailor a plan to match the characteristics of yourself and your home. We are happy to explain your coverage and options available to you.
Happy house hunting!