7 Things That Can Affect Your NJ Real Estate Homeowners Insurance Rates

What to keep in mind while evaluating the purchase of your next NJ real estate home

 

Although insurance may not be the deciding factor when choosing a home, it is important to remember the home you ultimately choose can have an adverse effect on the homeowners insurance rate you will be responsible for paying. Considering things such as the location of the property and how well the home has been maintained can mean the difference between paying significantly more or less for coverage. Often, things about the home itself can affect your insurance rates; factors that are costly, if not impossible, to change in the future. Below, NJ real estate experts outline 7 factors that make the biggest impact.

How Safe Is The Neighborhood?

Buyers do not have access to information about some variables that can affect their insurance rates. One example is the nature of claims filed in the neighborhood. If the home is brand new and secure yet located in an area of run down homes that have filed insurance claims in recent months, you could be considered in a high-risk tier according to your insurance company. The best solution is to ask your NJ real estate agent to do some research in an effort to see which factors will likely alter the rates for the home you are considering.

Is The Area Prone To Natural Disasters?

Natural disasters have become so costly that many large insurers now refuse to provide homeowners with coverage in certain high-risk areas. If a home is located in an area susceptible to mudslides, wildfires and the like, you may have to look elsewhere for coverage, perhaps from a smaller, independent high-risk insurer. According to the Insurance Information Institute, the average cost of a homeowners insurance policy is estimated to be around $900 for this year. In addition, if the home is susceptible to floods or earthquakes, you will need a separate policy regardless of where you live.

How New and Well Maintained Is The Home?

A new home has new utilities and this is very important to an insurance company when it comes to establishing your rate. Discounts for a new home can be very substantial, up to 30% in some cases. Keep in mind though that a new home discount will gradually decrease, likely a percentage point or two annually, until it eventually expires. Another factor to consider is that older homes with ornate features come with high replacement costs. Insurance is intended to pay to restore the home to its former state, and new features are easier to locate and often cheaper to buy. How well a home has been maintained also plays a role in homeowners insurance rates. A buyer needs assurance that the home has not been subject to more neglect than just failing to paint a home after many years. In addition to the home inspection report, it is wise to ask the current homeowner to provide a history of insurance claims on the NJ real estate property, known as a “comprehensive loss underwriting exchange.” This document will help you to determine whether there were problems with the home and, more importantly, if they were repaired.

Does The Property Have a Pool?

An empty pool on a property should be a deal-breaker, according to NJ real estate experts. The reason for this is that an insurance company likely will require that the pool be covered or filled before it will provide coverage. Even then, a solid fence with a locking gate will be a requirement. The premiums likely will not be much higher for a pool or hot tub; however for a new buyer, building an adequate fence immediately is an added cost to consider.

Is The Plumbing New?

If the plumbing system in a home is a 25-years old or has had unresolved problems in the past, this will raise a red flag for insurance providers. The reason for this is because companies fear water claims because they can lead to mold, and mold is very costly to remediate. If the home inspector reports leaky pipes, it might be wise to request additional information, or even upgrades, prior to purchasing the NJ real estate home.

What Condition Is The Roof In?

If the roof has not been updated in over 20 years, you could also have difficulty getting into anything but a high-risk, expensive insurance group. If the roof is new and it is constructed of impact-resistant material, you could qualify for a discount if the home is in an area subject to hail or high winds.

Where Is The Nearest Fire Department?

If the home is more than 5 miles from a fire station, your rates will likely start rising, according to NJ real estate experts. They might jump by 20% to 240%, depending on the home's distance from a station or hydrants. Buyers should obtain estimates based on different variables and from different companies in order to get the best rate for homeowners insurance.

 

The real estate market is changing rapidly and expanding into new avenues almost daily. Sometimes it can be very difficult to find the answers you need on a specific topic or issue. In times like these, you need a real estate professional who will provide valuable information and trustworthy advice. For more information on NJ real estate, call us today or click here to be connected with one of our top real estate specialists.