Texas is home to a hot housing market. If you’re selling a home or listing home, things couldn’t be better. The high demand for properties in places like Dallas means you can start a bidding war. This also means Dallas is a great market for real estate flippers, investors, and renters. While it is very easy to insure a new home, what about older homes? Here are a few tips to help insure an older home.
Bundle with Auto Insurance when possible
Everything is bigger in Texas; including the insurance premiums on older homes. Older homes carry higher insurance premiums. In fact many preferred insurance carriers will not insure your older property unless you add auto insurance to sweeten the deal. While you may be happy with your Geico or Progressive premium, you could be paying 30% or more on your homeowners insurance due to your brand loyalty. Companies that offer discounts for bundling include Safeco, Travelers, The Hartford, Kemper, and MetLife. On top of that, if you find yourself in situation where you have to file claims on both auto and home due to a catastrophic storm, you’ll be glad you bundled your policies.
Look at completely renovated homes first
If your budget permits, ask your real estate agent or realtor to show you homes that have been newly renovated. Home insurers offer discounts for older properties that have been either turned into green homes or newly renovated. While it varies by company, insurance carriers are looking for updates to the Roofing, Plumbing, Electrical, and Air Conditioning systems. The previously mentioned systems are the ones that normally lead to major losses. On the other hand, some insurance carriers want a home to be rebuilt from the ground up.
In a recent phone call with an insurance company, the underwriter said, they were impressed with the quality of the home’s workmanship. She felt the home was great risk. However, this particular carrier only gives credit if the home is demolished down to a point where only one wall was standing. If that happens, they would offer new home credits on an older home. Needless to say, we chose another carrier that gave credits for the home system updates.
Avoid Home with Non-Weather Related Claims
Here’s an important fact. Texas insurance carriers are prohibited from increasing your rates due to weather related claims. That means your home can get struck by lightning and burn to the ground. As along as your claim is weather related, the insurance carrier will neither increase your rates nor disqualify you for that claim. Keep in mind, there are ways of tracking lightning strikes.
On the other hand, older homes with claims for water, theft, vandalism and malicious mischief are subject to more underwriting scrutiny. As a result, it is important that you double check this prior to purchasing your home. In fact, you should check these during an option period if possible. This will keep you from losing earnest money or paying more for your insurance.
Look for homes with one layer roofs only
If you come across a home with a 2 layer roof, get ready to work. While wood roofs are generally a thing of the past, they tend to come up when you least expect it. I’ll make this one as simple as possible. Composition overlay roofs are fine as long as the first layer is also a composition roof. Some insurance companies will baulk because they may be forced to remove two layers during a claim. However, comp over comp is not impossible to insure.
Unlike comp over comp roofs, older homes with composition (or another other material) over wood shake are nearly impossible to insure for a number of reasons. After a roof loss, the insurance company has to pay to remove all layers and then re-deck and re-roof the entire property. On top of the high expense associated with comp over shake roofs, wood shake roofs burn like toilet paper. So, older homes with wood roofs and knob and tube wiring could mean a recipe for disaster to an insurance company. It’s best you avoid those hazards unless you can have the updated before purchasing your home.
In the end, no home is impossible to insure. Some are more difficult than others. It’s up to you, the buyer or seller, to make sure your home is in the best insurable condition. For older homes, renovated homes with updated wiring and one layer roofs make it much easier for insurance companies. Since the majority of older homes now require visual inspections, these tips will help you save money and time on your insurance premiums.