On the list of major purchases, it doesn’t get much bigger than buying a new house. While there’s a certain charm to getting a place that’s been lived in, there’s also something special about being a home’s initial tenants.
Heading into the busy home buying season, more people have moved into their new digs. According to recent data released by the U.S. Department of Housing and the U.S. Census Bureau, sales for newly built single-family residences in February increased 8 percent to a seasonally adjusted annual total of 539,000 nationwide. That’s the fastest sales pace in six years.
“[These] numbers are a great start to the spring buying season,” said Tom Woods, chairman of the National Association of Home Builders. “Hopefully, this is an indicator of how the rest of the year will fare.”
There are a number of differences between an existing home and a new home. Most of them are pretty obvious, like custom features that allow owners to hide unsightly cords for electronic hookups, for instance, or more modern plumbing and heating.
It’s these same features that also play a role in how homeowners insurance rates are established for new homeowners.
Similar to auto insurance, there are multiple factors that influence how premiums are set. Chief among these is a home’s age. If you’re the owner of a new residence – one that’s been built within the last few years – you’ll be able to take advantage of lower rates in most cases.
Older homes encounter structural problems more often
Much of this stems from the very nature of age. The older homes are, the more likely they are to encounter problems. For example, water pipes may burst under high stress (like freezing temperatures), or roofs may damage due to wear and tear, or even foundations can have problems if building codes have been changed.
Location, location, location
The location of your new residence also factors into how much you’ll spend for homeowners insurance. The cost of building supplies vary around the country, as do crime rates, and exposure to natural disasters like hurricanes in the Northeast or tornadoes in the Midwest. Because newer homes are more capable of withstanding the forces of nature, this plays a role in premium pricing as well. You may be able to lower your homeowners insurance costs by renovating or installing features that reinforce the structural integrity of your residence, like storm shutters for your windows, for example.
Roughly 4 in 10 homeowners who intend to renovate their residence this year will add on a deck or patio, according to a recent survey performed by The Harris Poll. It’s important to keep your insurers in the loop on these additions, as these too can affect your rates and may leave you underinsured if you don’t properly account for them.
New installations cost more to replace
Homeowners insurance covers you if the structure of your residence is damaged, but it also protects your belongings and interior features. Generally speaking, new homes tend to have more expensive installations, like marble countertops or hardwood flooring. Because these can be costly to replace, it can affect what you spend in homeowners insurance.
These are just a handful of the factors you should take into consideration after buying your new place. For more help in determining the appropriate amount of insurance for you, your family, and what will likely be your biggest investment, be sure to check out our homeowners insurance page.