What’s lurking behind the walls of your dream home?

For most Canadians, a home is the biggest investment they’ll ever make. It’s critical that homebuyers do their research and know what they’re buying before they sign on the dotted line. Having the information they need can help prevent surprises that can be costly to fix, dangerous, or even invalidate home insurance. “A home doesn’t come with a money-back guarantee, which is why it’s so important to be aware of potential issues before you buy,” says Henry Blumenthal, vice-president and chief underwriter, TD Insurance. “New homeowners need to know what they’re buying and ensure they can maintain and protect their most valuable asset, because once the ‘sold’ sign goes up, the buck stops with them.” Equally important as a home’s curb appeal is the cost to repair and maintain it, and the potential insurance implications that come along with it. The best way to understand a home’s condition is to hire a professional home inspector. A home inspection analyzes the structure and major systems: roof, exterior, electrical, heating, cooling and plumbing. By sharing the details found in the inspection report with your insurance provider, your insurer can help identify problem areas that could increase premiums, prevent you from qualifying for home insurance or require additional riders. “We provide homebuyers with information they need to make an educated decision,” says Bob Dunlop, president, Carson Dunlop. “Because every buyer is different – one person’s fixer-upper is another person’s nightmare – it’s not a question of whether a house passes or fails, it’s whether it works for a particular buyer’s needs.” When assessing risk, insurers are primarily looking at two factors: the frequency with which a particular problem tends to occur and the potential magnitude of the loss associated with the problem. Water damage is one of the most common home insurance claims and has the potential to cause major damage. Five years ago, water damage represented a quarter of the claims TD Insurance paid out; today it’s up to half. On average, water damage costs policyholders more than $7,500 to repair. A home inspector assesses a home’s vulnerability to water damage and can flag items like poor maintenance of eaves troughs and downspouts, improper installation of a basement backup valve, cracks in the foundation or an aging roof. “With a roof that’s 20 years old, the only guarantee you have is that it’s going to leak at some point,” adds Blumenthal. “An insurer’s unique insight and experience can help you make your buying decision. If your insurer isn’t comfortable with an item in the home-inspection report, you should take a closer look before you buy.” Other common items that a home inspector will look at that could ultimately impact your insurance premiums and eligibility include: » Plumbing and electrical. An outdated plumbing or electrical system can be a potential hazard if it hasn’t been properly maintained or updated. » Heating. An older heating system, such as an oil furnace, could leak and cause damage to your home and the surrounding area if not maintained properly. » Liability exposure. A pool that isn’t properly fenced creates a higher probability of an accident. » Previous renovations. If renovations were clearly the work of a corner-cutting do-it-yourselfer, they could pose a safety threat. » Smoke detectors. Without functioning smoke detectors there’s a higher potential for significant damage from a fire, including danger to you and your family. » Alarm systems. A functioning alarm system is a theft deterrent that could help lower your insurance premiums. “The inspection identifies what repairs need to be made and at what cost,” adds Dunlop. “Depending on your financial situation, what comes out of our report could have an impact on your purchase decision. It could even give you some bargaining power with the seller.” According to Canada Mortgage and Housing Corp., a typical home inspection is in the range of $500, depending on the size and condition of the home. “Buying a home is exciting and it’s easy to get carried away and overlook the details, but the most important thing buyers can do is take time to ask questions so there are no surprises,” says Blumenthal. “That way, they can feel confident that their new home is a safe investment and a safe haven.”

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