There are several ways to reduce your homeowners insurance cost and premiums when in the process of building a new home. In fact, it is easier to do this when building a home rather than buying a completed home.
The text below is taken from “New Built Home Insurance Guide”.
You will learn some hard and fast ways that you can save money on your home insurance rates when doing the smart thing and planning ahead while building your house.
How to Lower Home Insurance Costs When Building a New Home
Where you decide to build your home has the largest effect on the cost of your insurance. Regions exposed to hurricanes, tornadoes, mudslides, wildfires, earthquakes, etc. will always be considered “high risk” by insurance underwriters.
Remember that they homeowners insurance company is the one who will have to pay to rebuild your home that has been transported to Oz when that tornado hits your town.
If you have that choice between building a house on a river, bay-side, or by the ocean or building your dream home adjacent to a man-made lake, understand that your insurance is going to be higher for those areas that face flooding or hurricanes than it would be building lakeside and decide accordingly.
Avoid Risk When Possible
Insurance companies use the same underwriting system to calculate risks. This system works off of statistics. When your insurance agent tells you that you live in a high-risk area, therefore, your premiums have to be higher he isn’t a “meanie.” He’s just following the rules.
The secret to lowering your insurance is to avoid risk. Pretty easy, right? Bigger homes have higher insurance premiums because to replace them costs the insurance company more than it would cost to replace a smaller home.
Homes with porches are riskier than homes that don’t have them. Certain roofing types are more at risk of being replaced than others, same with home heating and cooling systems. Many of the luxury items that we all dream of having, such as pools and gazebos, add “risk” to your file. What if someone drowns in your pool?
Of course, this section might better be titled “MANAGE Risk Appropriately” because the only true way to avoid risk altogether is not to build a home in the first place! Be smart, weight your options carefully, and then manage the potential risks with the potential rewards to arrive at your decision.
Building materials play a significant role in the cost of home insurance coverage. Eco-friendly homes are the new fad, but the insurance industry is still trying to figure out how to insure them. Straw bale homes are cheap to build and receive rave reviews from their homeowners, but they aren’t on the standard risk scale. It’s the same with mud or sod houses. How do you replace a house that is made of non-standard building materials and sweat equity?
Additionally, you should take an interest in the building materials being used by your builder. Think of the Chinese drywall debacle with countless homeowners losing their insurance due to the substandard materials that were used in their homes. Be involved early. Ask your builder about the quality of the materials that will be used in your home construction.
Take Risk Mitigation Steps
If you can’t avoid a risk altogether, mitigate it. For example, if you’re putting in a pool (a risky venture according to insurance companies) make the fence around it higher than code. If you’re building a luxury home, put in a luxury home security system.
If you have an alternative energy supply, or alternative materials were used in the construction either work with your underwriter to understand better what he/she is looking at or shop around for an insurance company that specializes in alternative and green building.
Remember always that insurance agents want to sell you insurance. Work with your potential insurance company to create a better policy.
Ask questions. If you aren’t comfortable haggling, call your state insurance commissioner to discover more strategies for mitigating risks on your policy. State insurance commissions usually can also recommend agencies based on your location and type of housing.
Choose the Right Deductible
Lastly, you may be able to play with your premiums post-construction. Playing with the deductible is the most common way to lower the premium. Higher deductibles, mean lower premiums. This, however, is not the only means by which to reduce your final premium. There are a few other “tricks” out there.
For example, if you combine your auto, home, and health insurance under one company you may be entitled to a discount. Also, if you are a retiree, you are considered low risk by insurance companies as they consider you more able than most to care for your home.
Do Your Homework
There are many such post-facto tweaks that you can do to your policy so be aware that they are out there. In general, the best advice anyone can give anyone else is to do research. There are many resources available for you to take advantage of, most importantly your state’s insurance commission. They are the ones that can point you in the direction of where you can buy flood insurance, or who has the lowest premiums in your area. They will know how to negotiate insurance on the alternative building. They are there for you. Their advice is free. Use them.
The more quotes you compare then, the more chances you have to find the best homeowners insurance policy.
More on Home Insurance here: https://en.wikipedia.org/wiki/Home_insurance