What You Need to Know About Homeowners Insurance Before You Buy a Home
A mudslide buried a neighborhood in Oso, Washington earlier this year, killing over two dozen people and destroying over 40 homes. Of those homes, not one had the proper insurance needed to cover the damage.
While this example may seem extreme, an estimated 60 percent of homeowners are underinsured, and many are unaware they need additional coverage. If you plan to purchase a home soon, it pays to learn more about the property, potential risks, and your insurance options.
Homeowners Insurance Basics
A standard homeowners insurance policy provides compensation for losses or damage that occur to your home and contents from certain events. These events can include fire, lightning, vandalism, hurricanes, hail, and/or tornado damage. It also provides personal liability if you are sued for damaging or injuring another person or their property.
What Homeowners Insurance Won’t Cover
Homeowners insurance policies do not cover all disasters or damage. These exclusions are outlined in your policy and may include flooding, earthquakes, sinkholes, landslides, mudslides, mold, and termites.
You can still get insurance coverage for exclusions, but you must purchase it separately. The government’s National Flood Insurance Program (NFIP) offers flood insurance. If you’re at risk for a landslide or mudslide, look for a “difference in conditions” policy, and residents of earthquake-prone areas should consider specialized earthquake insurance.
Warning Signs Your Home is at Risk
As you shop for a new home or lot, look for subtle warning signs that could indicate trouble in the future.
- The construction is not sound. Certain structural or construction flaws are giveaways of unstable ground or prior damage. For example, large cracks or bulges in the sidewalks or concrete, cracks along the walls, or tilting telephone poles could indicate the home is on a landslide. Mud tubes on exterior walls or cracked paint on painted wood surfaces may be signs of termite damage.
- The home is located in an accident-prone area.Homes on or near hills or mountainous terrain are more prone to landslides, while certain wet regions in the South are at a greater risk for sinkholes.
- You can’t find anyone to insure you. If a company refuses to write a policy for you altogether, you’re probably in a location with a high likelihood or incidence of disaster.
Before You Buy
Due diligence before purchasing a home is critical and will be a key factor in helping you determine if you need additional coverage.
- Get a licensed home inspection. A licensed home inspector is trained to spot problems with your home. Find an inspector who is associated with a professional inspection association, such as the American Society of Home Inspectors or the National Institute of Building Inspectors.
- Go to your city’s geological survey site. All states have a geological survey website that can provide you with more detailed information about the land in your area.
- Get hazard reports from the city or county website. This information can be invaluable in helping you decide what type of insurance to purchase.
Knowing at-risk areas and what your home is at risk for can help guide you to finding the insurance coverage you need. If you have questions about your homeowners insurance or are considering additional coverage, call us today.
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