Insuring Your Dream Home

The 9 most commonly asked questions—and answers—on how to insure what's likely to be the largest financial investment of your life.

Insuring Your Dream

Insurance is one of life's unavoidable realities. Fortunately, in the grand scheme of things, the cost of insurance is a bargain compared to what it provides--peace of mind that your home will be made new again if it's damaged or destroyed.
   Because log homes are a niche market, you should shop carefully for a policy that meets your needs. Here are some common questions and answers to make you an educated shopper.

Q: When should I start shopping for log home owners insurance?

A: Even before you buy and build your dream home. To reduce your insurance costs, you can take advantage of discounts on premiums for incorporating certain building materials into your home. You'll also need to obtain insurance during construction, which usually converts to a home owner's policy automatically once construction is completed.

Q: Do all insurance companies offer home owners insurance for log homes?

A: No. Some of the largest nationwide companies, such as State Farm, Met Life, Merrill Lynch, Allied, Farmers, USAA and others, do offer log home policies. Other insurance companies may not cover log homes. Many companies are withdrawing from home insurance altogether because of a dramatic increase in natural disasters and high-priced lawsuits.

Q: Where should I start shopping for rates?

A: Start with your current agent. Many agents represent more than one insurance carrier. Your builder/dealer or other log home owners in your community also could provide some leads.

Q: Does log home insurance cost more than insurance for conventional stick-frame homes?

A: It often depends on who you ask. Some agents say it costs more. "Log homes can cost 20 to 25 percent more to insure than conventional stick frames," says agent Larry Cenotto of Met Life Auto & Home in Bellevue, Washington, which has insured hundreds of log homes in Washington, Idaho and Oregon.
   Other agents say it doesn't. "The cost to insure log homes isn't necessarily different than it is for a stick frame," says longtime agent Dick Hogan of Dick Hogan State Farm Insurance in Bangor, Maine.
What type of log homes will be covered?

A: Handcrafted or milled log home packages produced by professionals are both insurable. However, if you chop down your own trees, scribe them and build your home like American pioneers, obtaining insurance will be challenging, since underwriters will find it difficult to evaluate your performance as a builder or the value of your home.

Q: Will my building site influence my costs?

A: Yes. If your building site is located in a floodplain, along a steep slope or in a hurricane-, tornado- or earthquake-prone area, you can expect to pay more for insurance. Insurance underwriters also require access to water for fighting a house fire. When determining your risk, your insurance agent will note your home's proximity to a fire hydrant (up to 1,000 feet is acceptable), the distance to a fire station (within five miles is desirable) and whether that station is staffed by professional firefighters or volunteers. All these factors will influence your insurance premiums.

Q: What else will influence my insurance premiums?

A: Ever filed an insurance claim or missed a credit card payment? With computer technology and the Internet, our lives are an open book to the insurance industry. Our credit rating and our past insurance claim history dramatically influence the rates we pay.

Q: Are there ways to reduce insurance costs?

A: Log home owners may be able to obtain a reduction in their residential insurance premium based on what kind of roofing materials they specify during construction. Some insurance carriers also offer discounted premiums for sprinkler systems, plumbing devices installed in finished basements to prevent sewer backups and surge-protection devices to protect against lightning strikes.

Q: What should I look for in an insurance agent and policy?

A: Chose an agent experienced with insuring log homes. Agents familiar with log home construction recommend policies that specify guaranteed payment of the home's full replacement value (usually referred to as the Guaranteed Replacement Cost) in the event the home is lost to fire or other natural disaster.
   The key to choosing an insurance carrier is to find the right blend of benefits to protect your home without putting undue strain your wallet. Knowing you have everything covered--and covered at a fair price--will help you enjoy that dream home even more.