With homeowners insurance premiums soaring and an increasing number of companies tightening guidelines on just who -- or what -- they'll insure, it's especially important to start looking for insurance and learn what factors will lead to higher premiums even before you begin house hunting.

National Association of Realtors President Cathy Whatley said earlier this year that homeowners insurance premiums and the lack of available coverage have become significant barriers to homeownership. Most affected are those who have no credit history and existing homeowners who have water-related claims.

"In light of today's insurance crisis, homebuyers should not take their insurability for granted," she said. The Insurance Information Institute says the average cost of homeowners insurance increased by 8 percent last year and is expected to rise another 9 percent this year. But many homeowners have seen increases ranging from 30 to 70 percent.

Catastrophes like Hurricane Andrew and the Northridge Earthquake have triggered the increases, the industry says. Over the past 12 years insurers paid out more than $100 billion in catastrophe related losses -- about $700 million per month -- many times more than in previous decades. Another contributor is mold. Multi-million dollar jury awards, what the industry describes as sensationalized reporting in the media and profiteering by some individuals have led to an explosion in mold claims and costs, the III says.

In an effort to aid homebuyers, the III recently produced a checklist for potential homeowners to follow when looking for insurance. You should begin, the industry group says, by making sure your credit report is accurate -- credit histories are sometimes used to determine whether a company will insure you, and, if so, at what rate.

You should get a copy of your loss history report, such as a CLUE report from ChoicePoint or an A-PLUS report from Insurance Services Office. This is a record of home insurance claims you have filed. If you have not filed any insurance claims in the past five years, you won't have a loss history report. The better your report, the better chance you'll have of obtaining reasonably-priced insurance on the house you buy.

And if you're renting, make sure you have renter's insurance -- it's helpful to have insurance history when you obtain insurance for your new house.

Once you start looking for houses, the III says there are a number of factors that will affect your insurance rates, including:

Published: August 25, 2003

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