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| Aroostook Republican Photo/Lisa Wilcox Licensed customer service representative Jennifer Perreault of Gallagher Insurance in Caribou works on a homeowner’s policy for one of the agency’s customers. |
By Lisa Wilcox
Staff Writer
CARIBOU — When purchasing a home, there are numerous things to consider such as the location, condition of the house and school systems, along with financial decisions such as where to get the mortgage and insurance. While acquiring insurance for the home is not an extremely difficult process, the agent will need time to gather information in order to find the right policy for the chosen home.
According to Brian Sipe, owner of Gallagher Insurance in Caribou, it is a good idea to visit the insurance agency a few weeks in advance of the home’s closing in case there are problems that need to be corrected. Independent agents such as Sipe have access to a variety of insurance companies and it is the agent’s job to find the best coverage for the home, which can take some time.
Insurance companies have the right to refuse new business, so each has a set of guidelines in place to determine whether they can cover a home or not. The companies are mostly interested in the overall condition of the structure, including its age, condition of the roof and updates that have been done to the electrical, plumbing and heating systems.
“It’s a good idea to have an inspection done by an independent inspector,” Sipe recommended. “If there are issues such as roof repair that need to be taken care of, you may be able to negotiate that in the price of the home.”
The agent will most likely conduct their own inspection and obtain photos of the property to send to the insurance company. However, the agent’s inspection will not be as thorough as a property inspector’s.
Another factor the company will take into account is what type of heating system the home uses, Sipe advised. The majority of companies require a constant system such as oil or electricity be
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| Contributed Photo New home buyers need to gather information about the property they intend to purchase and allow their insurance agents time to find the proper coverage before closing on the home. |
connected. Homes heated solely with wood or pellets without back-up systems are difficult to find coverage for. Most companies also require that woodstoves and oil furnaces also be connected to separate chimney flues.
According to Sipe, insurance companies have tightened their guidelines on fire protection classifications, which refers to the distance of the area’s responding fire department from the home. Property that is located five miles or more away from the fire department will be rated differently than a home that is, say, one mile away, and some companies will not even accept more remote locations as new business.
“Obviously, the farther away the fire department is, the greater the chance the home would be a total loss in a fire,” Sipe explained.
Sipe advised that those seeking insurance for a new home can expect to be asked a lot of questions about the house’s construction. The purchaser should know what types of materials were used for the walls, ceilings and floors. They should also have a general idea of dimensions and year of construction. The type of wiring and plumbing will also be factored in. This information will be used to determine the replacement cost of the home.
“A lot of people think they only need to insure the home for the purchase price, which can vary greatly from replacement cost,” Sipe said. “For re-insurance purposes, companies require that homes be insured at least at 80 percent of the replacement cost value.”
The agent may also ask questions that the customer may find odd.
“We will ask about things like if there are smokers in the home and if they have pets,” Sipe said. “Some companies offer discounts for non-smokers and we need to know about pets, especially dogs, for liability purposes.”
A homeowner’s policy will also include premises and personal liability coverage. Each company will have a set of liability guidelines, such as railings required on steps and decks, and a list of dog breeds they find unacceptable, the majority of which include those that have a reputation for biting.
Another factor that will come into play in determining a premium is insurance scoring, which takes multiple factors into account
“You could write an entire book on insurance scoring,” Sipe laughed. “The biggest factor in determining an insurance score is credit. It’s an arguable point, but there are statistics that show that those with lower credit scores are higher risks.”
Coverage for personal property will also be included in the homeowner’s policy. A limit based on a percentage of the replacement cost of the home will be automatically calculated into the policy. It is a good idea to review that limit to make sure it is sufficient. Items such as antiques, higher valued jewelry and guns may need to be listed individually on the policy in order to provide adequate coverage.
Homebuyers should be prepared to have to make a down payment on their new policy. Policies that will be paid through escrow billing will usually require the entire first year’s premium be paid up front.
Sipe advised that while the agent will need a little bit of time to find the proper coverage for the home being purchased, coverage can be found for most homes within a 24- to 48-hour timeframe.
“Our companies have an excellent turnaround time,” Sipe said. “As long as the customer is prepared with the required information, we will get right to work on it.”
