Buying a Fixer-Upper? Here’s What You Need to Know About Insuring It
If you are looking into buying a home, you may be experiencing a bit of a hard time due to the current circumstances of the housing market. Buying a fixer-upper can sometimes provide a shortcut to homeownership, whether you are a first-time homeowner or buying your next home. With the low inventory but high demand for homes, the difficulty of obtaining a home has increased, especially on a budget. This is why we are seeing a rise in people buying fixer-upper homes. But what insurance do you need if you are buying a fixer-upper instead of a traditional home? We’ve compiled a list of insurance policies that can help protect you and your new property.
Eligibility for conventional insurance comes down to the ability to complete any outstanding repairs before or within 30 days of closing. What if the home has more difficult to complete repairs? What if you aren’t planning on moving in for a few months? The conventional insurance policy may be out of reach. Did you know that empty and under-construction homes are considered a high risk for insurance companies? The traditional insurance company will, more than likely, recommend that you get a different insurance policy that is specifically formulated for higher-risk situations like these. Some may even write the policy themselves while other insurance companies will refer you to a third-party insurer that specializes in these high-risk policies.
The most common form of insurance for homeowners with a new construction or newly renovated home is builder’s risk insurance. Typically, this policy starts with lower costs and as the home gets into better conditions, the cost will rise because the home value has now increased. This policy is easier to get if there is a solid, timed plan to finish the construction or new build.
Will your new home be sitting vacant while repairs and work are being done on the property? Vacant dwelling insurance may be a possibility. This policy will cover most physical losses if there are any, but it will usually not cover any form of theft from the premises. Pay attention to the location of the property and decide if theft is a huge or minor issue. This can be a real problem anywhere if the home contains valuable appliances, tools or copper wiring and piping.
Need to know more about policies to protect your new fixer-upper home? Reach out to your local agent for more information on the best insurance policies that fit your situation.