One of the reasons you may want to consider a new construction home rather than an existing home is that insurance rates may be lower. In some areas, a new construction home may have insurance rates in the first year that are 20 to 25 percent lower than for an existing home. There are several reasons for the lower pricing.
Many homeowner insurance claims are related to broken pipes, failing electrical systems and other issues that are common in older homes. Because newly constructed homes have new plumbing and electrical systems, there is less chance you will need to file a claim due to a water pipe or electrical issue. Because there is less chance of a claim, the insurance company can offer you lower rates.
When you build a home, you are able to add features that may also make your home more insurable. Metal roofs, fire-resistant materials, and fire-suppression systems are easier to add in a newly constructed home than one that has already been built. Tile, slate, concrete, metal and architectural shingles have higher quality, are more durable and more fire-resistant which can also reduce your homeowner insurance costs.
Protective Device Discounts
When you build a new home, you are more likely to add protective devices. These may include deadbolt locks and sprinklers as well as burglary and fire alarm systems. Some insurance companies offer what is known as “protective device discounts” which can lower your costs. If you live in an area prone to severe weather, adding storm shutters or hail-resistant roofing may also qualify you for discounts.
Things to Keep in Mind
There are things to keep in mind when you decide to build a new home. The location of the home, especially the distance to the nearest firehouse or fire hydrant may have an impact on insurance rates, whether it is new construction or existing home. Most insurance companies want you to be within 1,000 feet of a fire hydrant or within five miles of the nearest fire department in order to get preferred rates. It is also important to understand that your builder’s insurance covers the builder and not you. Normally, builder’s insurance is designed to cover the builder in case of loss, such as high winds blowing trees into the house during construction, vandalism or other things. Ask your agent for a “Course of Construction” policy that covers your liability should a child wander on the property and become injured as well as items you have stored there. Once the home is complete, the policy converts to a traditional homeowner’s policy.
What Does the Homeowner’s Cover?
There are several sections of your homeowner’s policy. The dwelling coverage handles covered perils like fire and smoke, wind, hail, vandalism and malicious destruction. It also covers items like wiring, plumbing, heating and cooling system problems that may lead to a claim. Dwelling coverage protects your home and attached structures, such as your garage. If you have a detached garage, shed or fence, other property coverage protects those structures. Personal property or contents coverage covers the items inside your home, such as your furnishings, appliances and other belongings. You can request replacement value which fully reimburses you for replacing your property or you can elect cash value which pays you the value of the property at the time of the loss. Home liability coverage covers any injuries or losses to a visitor on your property. You may also add additional living expenses that provide you with coverage should your home become uninhabitable.
Get Insurance Before Closing
One thing many experts suggest is to look into insurance before closing on your new home. Premiums may vary from company to company. You may also want to consider umbrella insurance which protects you and your assets from expensive litigation, including serious bodily injury, landlord liability or malicious prosecution. This type of insurance is especially beneficial if your new home is worth $500,000 or more.
If you are trying to decide whether an existing home or new construction home is better for you and your family, talk to your insurance agent. You may find that purchasing a newly constructed home will save you considerably on your policy premiums than purchasing an existing home. To learn more about the benefits of newly constructed homes, contact Southdown Homes by calling 610-873-1900 or visit our website to learn more about The Southdown Experience.