Home Insurance and Home Updates

I talked with three people who are buying homes in the Dallas / Fort Worth area in the coming weeks.  There are a number of questions I ask anyone buying a new home or rental property.  In addition to discussing the finish out of the home it’s important to know about the updates the home has had and when they occurred.  This is especially true if the home is over 10 years old.  The updates insurance companies want to know about and that I discuss are in four key areas: plumbing, electrical, heating and cooling, as well as the roof.

Plumbing:  One of the most common plumbing updates is replacement of the water heater and when that last occurred.  Other plumbing updates may include the replacement of faucets, drains and traps, vents, and even water supply pipes and sewage pipes.  Plumbing updates are an important gauge that helps determine the likelihood of a water leak.

Electrical Systems:  One of the top 10 causes of home fires is old or poor wiring.  If a home is 30 years old or older, it’s important to know what electrical updates have taken place.  Have two prong outlets been replaced with three prong grounded outlets?  Have older light fixtures been replaced?  Is the electrical box up to current code and in homes built prior to 1950, have electrical boxes outfitted with screw in fuses been replaced with a box outfitted with circuit breakers?  If a major remodel of the home has taken place or is planned, it’s important to know what wiring updates were performed and where.

Heating and Air Conditioning:  Air conditioning compressors wear out in the Texas heat.  Even though our winters are not as bad as our neighbors to the north experience, gas furnaces and heat pumps wear out.  It’s important to know when these components have been replaced along with updates to duct work.

Roof:  One of the most important updates to know about is when the roof was last replaced.  North Texas is hit frequently with hail storms; in fact, we’ve had two major hail storms in the last two years.  In addition to hail, we also experience straight line winds with gusts greater than 50 miles per hour.  This type of wind damages roofs too, so look for missing shingles as well as shingles that may be curled up.  These are prime areas for roof leaks that can damage sheet rock, insulation, and your personal property.   This is why it’s so important to know if the roof has been recently repaired or replaced.

If the roof has been replaced, find out what kind of shingles have replaced the old ones.  There are significant discounts to the annual premium for roofs that have been updated with hail resistant shingles.  The seller should have a certificate showing the class of hail resistant shingle if they chose that grade of shingle.

When it comes to these updates, insurance companies want to know whether there have been partial or full and complete updates.  For example, a partial electrical update is replacing the box but leaving the original wiring installed.  A complete or full update includes replacement of the entire electrical system including box, switches, outlets, and wiring.  In most cases, a complete update to the electrical, plumbing, and heating / cooling systems is uncommon even in major home remodels and renovations.

There are three reasons any home buyer should be concerned with what updates occurred and when:

  • Underwriting
  • Discounts
  • Unwanted surprises

All underwriters are looking for reasons to insure a person’s home or property while confirming it meets their guidelines.  For homes 40 years old and older, updates demonstrate a home has been well cared for and poses less risk to write a policy for it than one which is in poor condition.

In addition, many insurance companies are changing what homes they’ll write when it comes to the roofs.  Most home insurance policies have a 1% wind / hail deductible.  However if the roof has not been replaced in 10 or 15 years, this deductible could increase to 2% or the policy changed so that the roof is insured on an actual cash value basis instead of replacement cost.

Many insurance companies offer discounts on their home insurance policies for updates that have occurred recently.  In these cases, knowing if the roof was replaced in the last few years can save you money on your home insurance premium.  A few offer discounts if all four of these areas have had complete updates.  If the home you’re buying has had a significant remodel or renovation, knowing the extent of these updates can provide even more savings.

I run a CLUE report on every home policy I quote.  This report shows what claims have occurred on the home that’s being bought including weather related claims (hail, wind, etc.), water leaks, and even fires.  When these turn up, I always want to find out what happened and the extent of the repairs.  All home buyers should know if a hail claim was made but the roof not replaced as this can become an important negotiating point to bring up before the option period expires.

Do you have a question, comment, or experience you’d like to share?  Do so in the comments section of our blog or on our Facebook page!  I’d love to hear from you!

Evie Wise
Evie Wise


Evie Wise
Evie Wise

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