When you’re thinking about the budget for building a new home in the Edmond area, there is one area that it’s easy to overlook. Thinking about your home insurance costs may not be as much fun as choosing a floor plan, deciding on cabinets and flooring, or figuring out which upgrades you may want. But it does impact what you pay for your home every month. And that leads to a key question: Are insurance rates higher for a new home?
There Are Two Sides to This Question
We’re builders, not insurance experts. However, we can tell you that there isn’t always a simple “Yes or No” answer to this question. Let’s take a brief look at both sides of the coin on this issue. One side will focus on things that can cause you to pay higher insurance rates, while the other will look at things that can actually lead to lower rates.
When Will You Pay More to Insure a New Home?
When homeowners build a new home they often build something larger than what they previously had. If the home you’re building is significantly larger than the home you currently own, that can result in higher insurance premiums. The types of building materials and finishes you use in your new home can also impact the price. At a very basic level, it comes down to what it will cost to replace your home if it’s damaged. A more expensive home simply costs more to replace.
When Can Lead to Lower Rates to Insure a New Home?
It may come as a surprise, but older homes are often more expensive to insure than newer homes. Here are a few reasons why that’s the case:
- Outdated electrical and plumbing systems are expensive to repair and replace. In fact, some outdated electrical systems can even present fire hazards—which results in higher premiums.
- Old fashioned features such as wooden floors and plaster walls can be charming (and desirable), but they can be difficult to replace or repair because the materials used to create them are no longer available. New homes tend to use easily accessible materials. Materials that are hard to find cost more. Plus, it can be expensive to hire craftsmen qualified to do the work.
- Older homes can contain lead paint or asbestos. Fixing damages in homes with these toxic materials requires special training and disposal—and that costs more. That means your rates can be higher. Newer homes don’t face that problem. That means lower rates.
- Sometimes older homes have had shifts in their foundations. That can be a huge expense and insurance companies calculate that into their risk—meaning potentially higher insurance rates. Newer home generally avoid that issue.
- In many cases, newer homes use roofing material that is much more resistant to fire and hail. That means the likelihood of having to replace the roof is smaller on new homes—and your insurance rates can show that.
It’s Not Always About Age
Sometimes the factors that influence your insurance costs have very little (or nothing) to do with the age of your home. For instance, if the home you’re buying has had previous claims against it (even if you weren’t living there at the time) that can lead to higher rates. When you build a new home, there is no chance of a previous history of claims.
In short, when you build a new home, you have the option to customize your home’s plan so that you can live comfortably and conveniently. Some of the upgrades in materials can cause a modest increase in rates, but the quality of the materials (and advancement in newer safety features) will likely offset those costs. And the big benefit is that you’ll be in a home that’s actually safer and more comfortable.