When you consider buying a house, keep in mind how much the insurance wi ll cost....

When you consider buying a house, keep in mind how much the insurance wi ll cost. The cost may affect your choice of an old er versus a new home because insurance companies may offer discounts of from 8 to 15 percent on a new house. Why do you think this is so?

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Expert Solution

Insurance companies cover the risk of loss. Higher the risk higher will be the insurance premium and vice versa. In case of an old home, the risk of losses as well as wear and tear is very high and this cause for higher premium. The cost of insurance is thus very high in case of an old home. On the contrary a new home is when maintained and not so highly susceptible to losses and damages due to normal wear and tear. Hence the cost of insurance is much lower in case of the new home.

jeff jeffy answered 1 year ago

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