Something Old, Something New, Hopefully Not Borrowed, but Perhaps It’s Blue
Buying a new home can be a very exciting time! Some people look forward to buying a home that is move-in ready. Others prefer to buy a home that is a little bit older with character and charm, but needs a little TLC and elbow grease. When buying a new home there may not be that much work that needs to be done, other than slapping on some new paint or changing the floors and counters to something more fitting of your style. With older homes however, you may be in store for work that you may not be aware of which will affect your Homeowner’s insurance premium.
Most insurance carriers require updates to older homes within the last 25 years for the following:
- Heating – new furnace, updated parts to the furnace, new boiler. Serviced annually.
- Plumbing – Kitchens and Bathrooms updated. PVC or cooper piping in home
- Electric – 100 Amp Circuit Breakers in the house. GFCI outlets near water sources
- NO Knob & Tube wiring. Some carriers will accept 100 Amp Fuse service
When you are looking at older homes make sure that you ask the listing agent about all of the updates to the home that the prior owner has performed. If for some reason you can not determine when the updates were completed, make sure that your home inspector specifically checks all four requirements. He will put his recommendations in the official home inspection report which you can pass to your insurance agent prior to putting in an offer on the home.
If you find your older dream home and all of the above updates have not been completed, it does not mean that you will not be able to buy the home or get Homeowner’s insurance. It just means that you would have to be written with an Assigned Risk Carrier. In the State of Massachusetts the assigned risk carrier is the Massachusetts Property Insurance Underwriters Association (MPIUA/Mass Fair Plan). If your insurance is written with the Mass Fair Plan, your premium most likely will be double what you would pay with a voluntary carrier. Don’t let this discourage you. The good news is that once all of the updates have been completed you may then be able to write your insurance with a voluntary insurance carrier, which could drastically reduce your insurance costs while providing you with better coverage.
Ultimately, whether you decide to buy an older home or a new one, remember to always make sure that you have a licensed and reliable home inspector look at the property you are about to purchase. Also, call your local Independent Insurance Agent for help in obtaining an insurance quote for your new home. They will be able to answer your questions and put your mind at ease about an already confusing process and the insurance you will need for your the largest purchase of your life.