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  • Writer's pictureDennis Molinari

Navigating Insurability: Essential Considerations for Investment Property Buyers

When venturing into the realm of investment properties, buyers are often keenly focused on location, price, and potential returns. However, an equally critical aspect that should not be overlooked is the property's insurability. Insurance plays a pivotal role in protecting your investment against unforeseen events. Here are essential factors every investment property buyer should consider to ensure their potential property is insurable, safeguarding their investment for the future.


Modern Construction: A Safer Bet

Properties constructed post-1945 are deemed lower risk by insurers due to advancements in building codes and materials. Older properties may not only fail to meet current standards but also pose higher risks for damages, significantly impacting insurability.


The Roof Overhead: Ensuring Integrity

A roof in good condition, free from wear, tear, and moss, and less than 15 years old, is less likely to develop leaks or structural issues. Insurers value such well-maintained roofs as they significantly reduce potential claims for water or structural damage.


Flat Roofs: A Cautionary Tale

The unique maintenance and durability challenges presented by flat roofs, including water pooling and leaks, make them less attractive to insurance providers. Sloped roofs offer better water runoff and are preferred for lower insurance premiums.


Residential vs. Commercial: Understanding the Distinction

The line between residential and commercial property insurance is drawn at four-family units. Owning a property with more than four units categorizes it as commercial, necessitating a different insurance approach tailored to its unique risks.


Heating Methods: Reducing Fire Risks

Properties relying on space heaters or stove heaters are viewed skeptically by insurers due to the increased fire hazards they present. Opting for safer, built-in heating systems can enhance insurability.


Electrical Safety: Out with the Old

Knob and tube wiring and Pacific Stab-Lok circuit breakers are notorious for their safety risks, including fire hazards. Modern electrical systems are essential for securing insurance without exorbitant premiums.


Coastal Concerns: Distance Matters

Proximity to the coast brings the beauty of the sea and the peril of flooding and storm damage. Properties situated more than 1000 feet from the coastline are generally considered less risky and more insurable.

The Importance of Accessibility and Safety

Being within 1000 feet of a fire hydrant and ensuring a property is at least 10-12 feet away from neighboring structures can significantly impact its insurability. These factors are critical in reducing the risk and severity of fire damage.


Unique Property Features: Driveways and Neighbors

Properties that don’t share driveways or parking lots with others and those not adjacent to commercial buildings are less likely to face liability and damage claims, making them more appealing from an insurance perspective.


Flood Zones and Neighborhood Condition: Environmental and Social Factors

Avoiding flood zones and investing in well-maintained neighborhoods can greatly reduce insurance costs and improve the property’s desirability. These factors indicate lower risks for insurers, translating into more favorable insurance terms.





Final Thoughts

As an investment property buyer, understanding and considering these factors can make the difference between a smooth, profitable venture and one fraught with challenges. Ensuring your property meets these criteria not only facilitates better insurance options but also contributes to the overall value and security of your investment. In the ever-changing landscape of real estate investment, being well-informed about insurability can set you apart, allowing you to make decisions that protect and benefit your investment in the long term.

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