Verify low cost homeowners insurance is available for the home you are buying during your inspection period and prior insurance claims did not increase your insurance rates for one of Chandler, Gilbert or Mesa homes for sale you are buying.
Homeowners insurance can be expensive because of prior mold claims, hail, rain, wind, lightning, wind damage, flooding, and other acts of nature, as well as, fire, theft, accidents, failures within the home, etc. Flood insurance is additional insurance coverage that may be required by your lender if your home is in a flood hazard area. It is available through the Federal government and can be acquired through your insurance agent or directly from the Federal Emergency Management Agency also known as FEMA. Find out if your prospective new home is in a flood hazard area.
While the State of Arizona regulates the insurance industry and requires them to classify the extent of coverage offered by class, the consumer is left with the task of understanding what basic level of insurance coverage is offered in each class and then they are well advised to contact several insurance companies to determine what additional coverage is offered and at what price.
When purchasing a resale home, it is important to get an insurance binder from your chosen homeowners insurance company within the home purchase contract inspection period. By doing so, you will have determined you can get homeowners insurance and what it will cost you to insure the home you are purchasing based upon prior insurance history of the home while it has been owned by the current owner.
If there were too many insurance claims made by the current owner, you may be penalized by every insurance company you contact. They may charge you a much higher insurance rate or deny offering you an insurance policy due to the excessive insurance claims listed in their common insurance claims database against the property you want to purchase.
How you are rated? In addition to the prior insurance claim history of the home you are trying to buy, the insurance companies will evaluate you by your prior insurance claims history and your FICO score to rate you for insurance. While you can pay for a "clue" report to determine the insurance claims history, you can eliminate this expense by having the insurance company check out the property and issue you an insurance binder and commitment to insure your home.
My recommendations for those purchasing homeowners insurance are:
1.) Determine the level of coverage you want before you call insurance companies for quotes. Learn about your Homeowners Insurance coverage and options. Insurance premiums will be much higher for vacant properties than for occupied properties!
2.) Shop and Compare. Prices vary widely. Try to compare similar insurance plans.
3.) Get the most generous replacement plan you can find for the lease amount of money. But don't be lured into buying with high personal property limits or insurance that you don't need.
You should make sure you have full replacement coverage with an inflation escalator and a rider that forces the insurance company to build the home to current building codes AT THEIR EXPENSE - NOT YOURS! Do not allow them to reduce your pay out coverage by a depreciation factor.
4.) Keep your insurance costs lower by accepting a higher deductible. Once you have an insurance claim, your rates could rise or the rates of your new buyer could be higher.
5.) Never call your insurance company to inquire about your insurance coverage. (The insurance companies log a coverage inquiry call as though it was an insurance claim. It is not fair, but that is what they do.) Some insurance companies swear they don't do this. Make sure yours is one of them.
6.) If you have damage to your home, get several repair quotes first before you call your insurance company. Look at your insurance deductible and decide if you should do the repair at your expense or have the insurance company do the repair.
7.) If at all possible, only make an insurance claim when the damage is severe and very costly. Otherwise, make the repairs on your own and don't report the problem to your insurance company.
8.) Remember insurance companies track claims and have long memories. If you make too many insurance claims within a short (3 years) period of time, realize that you are making your home more costly to insure for a new buyer and they probably won't buy your home for that reason.
9.) All insurance companies and all insurance policies are not alike. Educate yourself and ask a lot of questions so you don't learn the hard way when you need insurance coverage that the insurance you have, is not what you THOUGHT you had. For instance: replacement insurance requires periodic increases in your policy coverage as building costs rise or when you remodel or expand your home. Does your policy cover changes in building code changes?
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