4 red flags a home may be 'uninsurable' — and 4 steps to take before buying
The insurance warning signs prospective home buyers should watch for — and steps to take before making an offer
Buying a home is one of the largest financial decisions anyone can make, and missing an insurance issue can turn a dream purchase into a costly problem. A property that’s hard or impossible to insure can saddle new owners with expensive, out‑of‑pocket repairs; sky‑high premiums; or even force a lender‑placed policy that costs significantly more than standard coverage.
Before signing a contract, savvy buyers need to understand not just the physical condition of a house but also how insurers view its risk profile. Some features that seem cosmetic can signal deep structural issues that insurers don’t want to cover, and certain locations — especially in flood or wildfire zones — can make standard coverage prohibitively expensive or unavailable.
Here are four red flags that could signal an 'uninsurable' home, and four steps to take before buying, according to Realtor.com.
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Knob‑and‑tube electrical systems raise fire risk
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Homes with knob‑and‑tube wiring — an early electrical system used before modern standards — pose serious fire hazards that many insurers won’t cover. These outdated circuits can’t safely support modern electrical loads and often lead to full policy denials or steep premiums, according to Realtor.com. If a listing indicates original wiring and the seller can’t document upgrades, that’s a red flag that the home may be uninsurable as‑is.
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Major foundation issues
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Horizontal cracks and uneven floors signal deep structural concerns for insurers, says Realtor.com. These issues often lead underwriters to either deny coverage outright or inflate premiums so high that the home becomes unaffordable to insure. Foundation risk is also one of the costliest structural problems to repair after purchase.
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Old or deteriorated roof
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A roof that’s older than about twenty years or has significant missing or damaged shingles is a common reason insurers refuse to issue a policy, notes Realtor.com. Many companies require roof replacement before binding coverage because leaks and water damage are among the most frequent and expensive claims. Without proper roof documentation, coverage becomes uncertain.
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Location in high flood or fire risk zones
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Homes in designated flood zones or near wildfire‑prone areas may require separate or expensive specialty policies, and some insurers simply won’t cover them. A property’s FEMA risk designation or wildfire exposure can make traditional homeowners insurance unaffordable or unavailable, especially in parts of the U.S. facing increasing climate pressures, according to Realtor.com.
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TIP: Contact an insurance agent before you bid
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Before making an offer, Realtor.com suggests reaching out to local insurance professionals to inquire if the property can be insured and at what cost. Agents can often pull a CLUE (Comprehensive Loss Underwriting Exchange) report showing past claims history, providing early clarity on potential insurance hurdles.
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TIP: Check the FEMA website for flood‑risk data
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Use the FEMA flood mapping tool to identify whether the home falls in a high‑risk zone. Properties in certain flood categories may require mandatory flood insurance, notes Realtor.com, which can dramatically increase annual costs.
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TIP: Opt for specialized inspections on older systems
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If a home was built before 1970 or shows signs of roof or electrical age, Realtor.com suggests hiring licensed specialists (such as electricians or roofers) to inspect these systems. Their reports can uncover hazards insurers focus on and give you leverage in negotiations or decisions.
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TIP: Talk to neighbors about insurance experiences
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Neighbors can provide real‑world insights into local insurance trends, notes Realtor.com. If nearby homeowners have struggled to renew coverage or faced sharp premium hikes, that pattern could be a red flag for your prospective property. Discussing such issues before closing can save you from surprises later.