Should you build or buy an existing home? That’s a question on the minds of many families and individuals.
Aside from the personal preferences, you should also consider home insurance differences. Buying a new home versus a used home plays a role in insurance premium rates. Here are some of the factors involved, as well as how to weigh the differences.
Insurance Pros and Cons of Buying an Existing Home
When you buy an existing home, you have less input on the materials used in the home’s construction. This means that anything can and will happen, from a leaking roof to unrealized asbestos to an electrical fire. Insurance companies know this, and they will consider the age of the home, the types of materials used to build it and other aspects of the home.
In the majority of cases, it will cost more to insure a used home versus a new home. However, it’s important that you take this with a grain of salt. If you can buy your existing home and get a great deal, your savings may offset the rates you incur as a homeowner. Always conduct a thorough analysis of your short-term and long-term costs.
Insurance Pros and Cons of Building a New Home
Do you have a dream home in mind? You can make it happen if you have the right amount of money, choose the best builder for your needs and can find the perfect piece of land. You’ll get all the amenities you desire and feel great knowing you designed your own residence.
Of course, all this customization comes with a price tag, which can be hefty when compared with existing homes. In general, it will cost more to build a home — unless you’re doing it all yourself, which is only a possibility for a handful of homeowners in the scheme of things. However, you can expect that new homes will be less expensive to insure than trying to insure an older home. Older homes usually mean increased premiums. Work out the savings and see which makes the most sense for your pocketbook and investment goals.
A Quick Note on Builders Insurance
Builders’ insurance is carried by the builder of a new home, or of a contractor renovating an existing home. Because you are not the holder of the policy, you have little say over the builders’ insurance coverage your builder carries. While builders’ insurance is necessary for a builder to hold, it does not negate your responsibility to get coverage for your home.
Before you begin the process of searching for a new home or getting bids from home builders in your area, it’s best to reach out to an independent and local insurance agent for advice. That way, you’ll feel better about the decision you ultimately make between buying old or building new.