How a New Home Can Reduce Your Insurance Risk

Guest Blogger: Samantha Alexander

When considering whether or not to buy a new home, buyers should consider all of the potential benefits. One benefit many people overlook, is the reduced risk of safety hazards that come along with buying new. People who buy newly built homes also are buying insurance-friendly homes.

Home insurance companies make a living evaluating risk. They want to insure low risk homes and they reward homeowners who demonstrate it with better rates than those who don’t. For many reasons, new construction usually translates into lower risks.

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Start at the top

One of the first things a home insurance agent will ask you is the age of your roof. Why? Because providers know what severe thunderstorms can do. In 2012, according to the Insurance Information Institute (III), they caused nearly $15 billion in insured losses – much of that to roofs. The average weather-related insurance claim costs $6,000.

Since older roofs can be particularly vulnerable to storm damage, you can see why newly constructed houses – with newly constructed roofs – are desirable from an insurance standpoint.

The saving power

When you’re considering buying a house, you might not dwell too much on the electrical system. You should. Outdated electrical systems are a major cause of house fires.

It can make $30,000 worth of difference. That’s the average loss from a residential fire. Structure fires are much more common than you think: The National Fire Protection Association says there about 500,000 every year.

Part of the “character” or “history” of those older homes could include fuse boxes (as opposed to circuit breakers) and ungrounded electrical outlets, which carry a major risk of fire. New homes feature up-to-date electrical systems, with circuit breakers and modern wiring, which greatly enhance safety.

Running hot or cold

You want your home to be comfortable, and you depend on your heating, ventilation and air conditioning system to keep you cool in summer and warm in winter. That older house could be comfortable when you tour it in spring or fall, but how will it feel during the other seasons?

The NFPA weighs in here, too. Air conditioning system failures contribute to about 2,500 house fires a year. New systems are much less likely to fail than old ones, cutting the chance of fire substantially.

As for the heating side of the equation, the III says frozen and burst pipes are the third-largest cause of property losses by homeowners. The resulting water damage accounts for about $5 billion annually in claims.

Homeowners reduce the likelihood of frozen pipes with newer heating systems. New plumbing also helps – modern pipes aren’t as likely to burst when they freeze.

Another hot issue

Of course, fires can still break out even if your home has the most modern electrical and HVAC systems. But, again, newer homes can help you escape major damage. Newer construction methods include fire retardant carpet and other materials, and modern firewalls work to keep fire from spreading as rapidly.

That means you’re giving the local fire department a better opportunity to douse the blaze before there’s major damage.  Newly built homes also are required to have hard-wired smoke detectors.

How it affects your wallet

The bottom line? Many home insurance providers offer discounts of as much as 20% for newer homes. But you benefit in other ways, too.

The lower likelihood of filing claims means you’ll also avoid paying a deductible. Remember, that’s the amount you’re responsible for in a covered claim. This is where you can play the risk-assessment game, too. If you believe there’s a lower chance of having to come up with the amount, you can set your deductible higher – which translates into lower premiums. But take this step with great caution – you should never set the amount at a level that you’d have trouble coming up with should there be a claim.

Filing fewer claims also can help you to maintain better rates.

This article was contributed by Carrie Van Brunt-Wiley and Samantha Alexander, contributors to the Blog. The Blog has served as a resource for home buying consumers since 2007.

Tip Tuesday: How much Internet speed is right for you?

Different download speeds for broadband services can give Internet users a variety of online experiences.


Internet speed – or a lack thereof – could influence the quality of experience you have with everything from emailing and web browsing to online gaming and video conferencing.

So, to help you figure out what speed is right for you, you should first understand that connection speeds are calibrated in megabits per second (Mb or Mbps), a number referring to how many bits of data – in millions – can be moved in a second.

The other factor for measuring speeds is bandwidth, or the “size of the conduit in which the data is traveling,” says David Salway, director of the Broadband Program Office for New York State.

Do you want to get up to speed on Internet speeds? Keep reading to find out how much Internet speed is right for you…

Download Speed: 1-4 Mbps

When you purchase Internet service, you might be offered packages grouped by speeds in various tiers. The 1-4 Mbps tier is at the lowest end of today’s connection speeds, thus accounting for a lower price range, according to Salway.

What can you expect at this tier? “There will be buffering as videos catch up,” Salway explains, referring to delays in the streaming, or delivery, of media content. He adds that “If you have a shared connection with three people using [the Internet] at the same time, it’s going to be a lower speed.”

[Want a faster Internet connection? Click to compare rates from providers now.]

However, if only one person is using the Internet connection, they should be able to enjoy most basic applications without bothersome delays or buffering.

What You Can Do: Basic email, web browsing, music streaming, standard definition video (SD), remote surveillance, telecommuting*

Download Speed: 4-6 Mbps

The Federal Communications Commission considers 4 Mbps the minimum speed “generally required for using today’s video-rich broadband applications and services, while retaining sufficient capacity for basic web browsing and e-mail.”

Salway offers a similar opinion, saying most users with 4-6 Mbps typically will have smooth sailing if they are emailing or, in some cases, streaming music.

But online gaming applications, which might require much higher speeds, could fail at this connection tier, depending on the network traffic.

In fact, the FCC reports you might be at the very minimum speed for two-way online gaming in high definition or streaming HD-quality movies. So, if you’re a movie buff or gamer, your lifestyle might be better suited to higher internet speeds.

What You Can Do: File sharing (small/medium files), IPTV (Internet TV services)*

Download Speed: 6-10 Mbps

Salway describes this connection speed as a “good middle ground” for most subscribers at home, especially those who like to watch TV or movies on their home computer.

“Entertainment enthusiasts will want to get this as a minimum,” Salway says. “I would say it’s the most common that people use.”

At around this speed, online gamers should also be able to step up to their computers and vanquish their enemies – without much interruption.

[Want to upgrade your Internet speed? Click to compare rates from multiple providers now.]

However, if different people are using the same broadband connection at once – Dad watching TV, Mom downloading Zumba videos, the kids sharing music files – you might not be so lucky.

Salway offers a warning about multiple users on this speed: “You still might have trouble with online gaming, television viewing, or video on demand.”

What You Can Do: Online gaming, video on demand (on a single device)*

Download Speed: 10-15 Mbps

This speed tier is quickly becoming the new normal – sort of like going 65 mph on the highway.

The FCC’s 2012 “Measuring Broadband America Report” is also noticing this trend, noting that more consumers “are subscribing to faster speed tiers and receiving faster speeds than ever before.”

And at this 10-15 Mbps tier, broadband subscribers will detect sharp increases in download performances, Salway notes.

“Web pages come up faster, and you can receive and download files faster,” says Salway. “You are going to have to pay more for this, but you are going to notice the difference.”

What You Can Do: Telemedicine (health care via telecommunication), remote Education (distance education programming), IPTV High Definition (HD TV programming)*

Download Speed: 15-50 Mbps

Do you have a number of teens or young adults in the house? If so, this cat-quick speed might be for you.

“This will give you a good experience without delays,” Salway says. “You can do lots of movie viewing on multiple computers or multiple devices and do things on multiple applications.”

For example, one person can also play an online game in one room while other people watch movies or share files using the same broadband connection.

[Think your family can benefit from a higher-speed internet? Click to compare rates now.]

High-tech “smart” homes, according to Salway, might also be wired at this speed to accommodate various Internet-based applications, such as those that monitor energy usage.

What You Can Do: HD video surveillance*

Download Speeds: 50+ Mbps

Most users aren’t currently blazing along the Internet at this speed, but if the FCC gets its way, these speeds will be coming to homes near you sooner rather than later.

Here’s why: The FCC’s “Measuring Broadband America” report says the Commission has established a “National Broadband Plan,” which has a goal of at least 100 million homes having affordable access to download speeds of at least 50 Mbps by 2015, and 100 Mbps by 2020.

What gives for these goals? The FCC’s belief is that top-speed broadband networks across the country will make all of us highly interactive on the economic, educational, and civic levels.

Salway agrees with this sentiment, saying that “The more speed and bandwidth you have, the more you can do at the same time.”

So, what requires connection speeds in this range? Commercial applications, including video conferencing and remote supercomputing, just to name a few.

What You Can Do: Video conferencing (multiple users), remote supercomputing, real-time data collection, real-time medical image consultation*

*All Information about applications and minimum broadband technologies in relation to broadband speeds comes from David Salway, director of the Broadband Program Office for New York State.

source: Tony Moton | Yahoo! Homes


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