Insurance companies love newly built homes for 3 specific reasons. A new house means stronger foundations, and less likely to incur problems that most older homes face. Therefore, the chances of filing an insurance claim are pretty slim, giving you an upper hand on lower rates. Depending on other factors such as location and material, you may also be able to earn extra discounts. Now you can call that a win-win situation.
- If you are purchasing an already built, ready to move in home, then you would just need to a purchase a homeowners insurance policy starting from the day that you take possession of the house. If you are hiring a contractor to build your home from scratch, then he is responsible for supplying his workers with builders risk insurance, regardless of whether or not you are the owner of the land. The contractor’s job is to provide you with a finished home. However, if you are in charge of building your own home, and have taken it upon yourself to go out and buy all the material, hire workers, and act as the contractor, then it would be your job to obtain builders risk insurance. When the construction is finished and the house is complete, you would just convert your policy from builders risk to regular home insurance coverage.
- One of the most important factors in determining home insurance rates is location. Where is the home located? If you live in an area prone to storms, fires, and other weather perils, your home is at a higher risk which may cause insurance rates to increase. Many homes are rated based on how far they are from a fire station and fire hydrant. If a house sits within 5 miles of a fire station or 1,000 feet from a fire hydrant, then it would be eligible for a discounted rate of up to 3%. Depending on 3 factors, a town is classified on a scale from 1-10 using The Public Protection Classification program. The 10 categories are used to rate how good the fire protection system is in a community. The 3 factors are fire department quality, water supply system, and fire alarm & communications system. Fire department quality makes up 50% of the classification, which consists of how well staffed, equipped, and trained a fire station is. Second is water supply system which makes up 40% of the classification, this includes the quality of the fire hydrants and amount of available water. Lastly, making up 10% of the total classification, is fire alarm and communication systems. This has to do with quality of telephone lines, systems, staffing, and dispatching. At 1 being the best and 10 being the worst, anything over a 5 would usually give you a higher premium. Class 1 would mean there is a fire station at every corner.
- Before building your home, do some research on what materials could save you money. For example, if you are building near a forest or any area that could easily catch fire, you would be better off using fire resistant materials such as metal and brick. Regardless of how new your home is, you’ll still want to have insurance in case of any natural disasters. Installing a good sprinkler system may also save you some money on your home insurance policy, especially if you live near a high fire zone and over 10 miles from a fire station. Home insurance coverage is based on how much it would cost to replace your home. Two exactly same homes can be built on opposite sides of the country yet one can cost 3 times more than the other. This is because the cost of land differs. If one of the homes were built in Arizona where hazards are very minimal versus the same exact home built in Los Angeles for triple the price. Land gives a property its value, but the cost of rebuilding a home does not take location into account.