When people are planning to move into a new home, they can get really excited. And that’s completely understandable. But sometimes they overlook things or take things for granted, and those things can come back and bit them in the butt. One of those things believe it or not is Home Insurance.
Now for folks who may be new home buyers, they may have no insurance policy of their own, or have a tenant package for the place they are renting. So getting a Home Policy may be completely foreign to them. For Home Owners who are selling and moving into a different home (newer, bigger, different location, etc), they may be familiar with home policies already. But both of these groups of people need to, to a certain degree, approach Home Insurance as if it is a completely new undertaking. And lets face it. If the home you buy is new to you, its new to your agent.
The most important thing to keep in mind is, every home is different. And those differences may not seem like any big deal to you, but there are certain things that your typical Home Insurance Policy wont cover.
Now I should point out, there is generally someone who will provide an insurance policy for just about anything. No guarantees, but generally. But those ‘specialized’ policies often come with a much higher premium, so you need to be careful. But before I go into this, I should emphasize that some of the things I’m going to cover have to do with the physical home itself, and some have to do with your personal circumstance. Any of these items ‘might’ be an issue, but it really depends on the insurer you choose to work with.
OK, so what kinds of things might result in your current insurance provider (or your typical insurance provider) from granting you a policy on your new home?
In older homes, you may find an electrical system based on something called ‘Knob & Tube’. This is often considered a potential fire hazard, so if that is what you’re faced with, you might have a problem.
Another issue you might run into is an electrical panel that is 60 amp, and may have the old style glass fuses. This is also often something your typical policy will not accept.
As a general rule, any heating systems that are based on some form of ‘stove’ (wood pellet, non-standard wood stoves, etc) may raise a flag with certain insurance companies.
Most forms of ‘portable’ heaters like space heaters or other types of unsecured heaters may also become problematic. Even certain types of fireplaces are becoming questionable when it comes to insuring a home.
And one thing that may not be considered an ’active’ part of the heating system, but can sometimes be left behind from earlier heating systems is a fuel tank. Long story short, they can cause all manner of trouble, but specifically if they leak and still have fuel in them. I have a friend who had a fuel tank that leaked in their home. The contamination was so bad that they ended up having to basically tear down the entire home and truck away the vast majority of the soil that the leak impacted.
Now this is something that should be disclosed to you if the home was known to have a grow op operating in it at some point. Even if any evidence of visible damage resulting from the grow op had been repaired, their could be all manner of mold, mildew or other nasty bits found in the walls, attic or other places. They can cause health issues and other problems.
In this case, we’re talking about structural adds, changes or removals which are not done by a professional or not done properly. So for example, I had mentioned in an earlier blog that I was chatting with a guy who did service for septic systems. He told me a story about a guy who had build an extension on his home to add a bedroom. He told me everything looked great (hardwood floors, nice molding, etc.) but the problem was, he built this extension over the septic cleanout port. Don’t know what the guy was thinking, but you can only imagine the trouble that would cause.
Then as I mentioned, there are things to do with your own circumstances that can sometimes have an impact on your ability to secure insurance. I wont go into details, but it is something you may want to consider.
Cancellation of Prior Insurance due to non-payment
Using Property for Commercial Use (Running a Business, Renting, etc)
Using the Property for Farming
Having Insurance Cancelled or Declined by another Provider
Multiple Mortgages on the property
Now if / when you decide to put an offer in on a property, it is pretty common to have a clause in any offer that states the new owner will secure insurance. And from my experience, its not uncommon for anyone with an existing insurance policy to just assume they will have no problem getting a policy on their new home. And for most typical ‘builder’ homes built in the last 10-20 years, that is probably a fair assumption. BUT. Insurance companies, like Money Lenders are becoming a little more particular about home purchases. It isn’t uncommon to see Inspections being done by anyone who has a vested interest in the property. So that includes you, your mortgage provider and sometimes your insurance provider.
So make sure you are keeping your insurance company in the loop. You don’t want any unfortunate surprises after putting in an offer on a home. Don’t assume insurance is a foregone conclusion.