Homeowners insurance is necessary to cover repairs and replacement costs if your house and/or its contents get damaged, but sometimes getting coverage is easier said than done. Insurance companies can refuse to issue a policy for several reasons. Keep these in mind if you’re thinking about buying a house.
Location
A home located in an area that tends to experience hurricanes, tornadoes and other forms of extreme weather would likely be damaged in a storm, and a policyholder would, therefore, be likely to file a claim. In some cases, a company might issue a policy if a customer agreed to install protective measures, such as hurricane shutters.
A house in a high-crime neighborhood would be at greater-than-average risk for break-ins and vandalism. An insurer might deny coverage or a company might agree to issue a policy if the homeowner installed deadbolts and an alarm system.
Age and Condition of the House
An old house with outdated electrical, HVAC and other systems, or a home that was constructed with certain potentially hazardous materials, would be more likely to have associated claims than houses with more modern systems and building materials. An insurer might issue a policy if outdated features were updated.
Problems caused by lack of maintenance, such as a leaky roof, would lead to claims and could make an insurer reluctant to issue a policy. Potentially dangerous features, such as pools and treehouses, are risky for insurers. If you bought a house with one of these, a company might refuse to grant coverage.
Your Credit History
Insurance companies consider other factors to assess risk, including an applicant’s credit score. Insurers want customers who will pay their premiums on time, and a credit report includes information on any missed or late payments, as well as how an applicant uses credit. If you have a low credit score, you might be able to get homeowners insurance, but you would most likely have to pay higher premiums than someone with a better score, all other factors being equal.
Think About Homeowners Insurance Coverage Before You Buy a House
If you’re thinking about buying a house, consider whether it has any features or potential problems that could make it hard to get insurance. If so, you might be able to make some changes to convince a company to insure the property, but there’s no guarantee. If your credit score could use a boost, work on that before you start shopping for a house. A good credit score will also help you qualify for a mortgage with a competitive interest rate.
