4 Uninsurable Money Pitfalls to Avoid When Buying Your Next Home

Homebuyers have recently been facing a very difficult housing market. Inflation, mortgage interest rates and low inventory left many home buyers on the sidelines.

So on top of that, experts say that if you're buying a home, be sure to avoid buying a home that will cost a lot to insure. Here are some of the pitfalls to watch out for:

Inspections are the key to lowering home insurance costs

According to Cronin Insurance Agency, several tests can save you from falling into a high insurance trap.

These include survey inspection, appraisal inspection and home inspection.

However, according to Cronin Insurance, you'll need a few other tests to understand and estimate your insurance costs.

Inspection report for wind reduction

This test will test how hurricane resistant the home is. As Cronin Insurance mentioned, it also lowers your home insurance premium.

4 point test

A 4-point inspection checks the roofing, plumbing, cooling/heating and electrical systems of the home.

“If your 4-point inspection reveals a discrepancy, you will need to fix it before the insurance company will allow you to bundle coverage. You fix it by producing a receipt for payment from a contractor stating the exact fix specified in the 4 points,” according to Cronin Insurance.

Loss report

Experts also recommend requesting a loss report or survey of your potential new home.

Stuart Bensussen, director at Surewise, said that from a home insurance company's perspective, he too often sees customers on the other side of this dilemma, having already fallen into the trap of buying a home that turns into an insurance nightmare.

"Requesting a loss report on your potential new home is a great way to check the history of the property you're considering buying," Bensussen said.

As he explained, many uninsurable homes have had problems in the past—from leaky roofs to unstable pipes that cause flooding—and a loss report will highlight any claims made by previous owners in the past.

"It is important to investigate any past claims arising from this - do they point to a basic structural condition in your home that may arise again?" he said.

Additionally, he said, if the home you're looking at is being remodeled, you'll want to look for the paperwork that goes along with that project.

"While many renovations can significantly increase the value of the house if they are done incorrectly, the house can become dangerous," he said. "Each insurance company will require proof that previous renovations meet construction requirements and did not endanger any wiring or piping of the property - so do your checks before buying."