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Yes it will. Thank you and goodnight.
It should come as no surprise that the cost of homeowners insurance varies. The real secret lies in determining why that is and if there is anything you can do about it.
Well, yes there is. Thank you and goodnight.
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Seriously though, home insurance rates can and do vary from region to region and sometimes from neighborhood to neighborhood or even street to street. A good example of a street to street difference is two identical homes on opposite sides of the street; the house on the left is in town and is serviced by a professional fire department; meanwhile, the house across the street lies outside city limits and is served by the volunteer fire department. One fire department has an average response time of under 5 minutes and the other has an average response time of 15 minutes.
home insurance rates can and do vary from region to region and sometimes from neighborhood to neighborhood or even street to street
In this example it’s not hard to understand why one homeowner pays less for insurance than the other – even though everything appears to be the same. There is a risk of more damage from a fire to the home outside of city limits because of the longer response time of their local fire department. Generally speaking, homeowners will pay a premium that reflects the level of risk the surrounding area poses to their home.
**Greater Risk = Higher Premium**
External risks are made up of all sorts of variables; for example: being close to an exit or entrance ramp to a highway, especially one with a history of accidents, will raise your rates. If your home is situated close to fire hazards, your house will obviously run a higher probability of catching fire, which again is another risk that raises rates.
homeowners will pay a premium that reflects the level of risk the surrounding area poses to their home
Neighborhood to neighborhood differences in homeowners rates will occur for a number of reasons, even when those homes are found within the same municipality. Again, this depends upon the home’s proximity to certain risks; crime rates in the neighborhood may also play a role. Crime rates are rarely uniform from one part of a city or town to another, and because elements of your homeowners protect you against theft, the greater the risk, the higher the premium.
If you live in one of these higher risk areas, there are ways to lower your home insurance rate without pulling up stakes, selling your home, and relocating. You can take proactive steps wherever possible in order to reduce the risks that caused your insurance carrier to charge you a higher rate in the first place.
If you live in one of these higher risk areas, there are ways to lower your homeowners insurance rate without pulling up stakes, selling your home, and relocating
For example, if you are paying a higher premium from increased fire risk, adding central station monitoring of your smoke detectors to your burglar alarm system may be enough to improve the response time of your local fire company that your insurer could actually lower your rate.
Upgrading locks, adding security doors – even trimming the back shrubbery around your home – could be enough to decrease your risk of burglary. Your best course of action is to begin with an honest conversation with your insurance agent about what you can do to reduce risk.
**Lower Risk = Lower Premium**
Some sources of increased or decreased risk are based on larger geographic areas, including gulf and southeast coastal communities that are susceptible to hurricanes, California’s risk of earthquakes and the risk of wildfires in western mountain states. Insurance companies track and chart natural phenomena and assign risk values to different regions and base their rates accordingly.
We’ve all heard the expression you can’t control the weather and while that may be the case, we can control the amount of damage that occurs. Remember that it’s the potential for damage that insurance companies base your homeowner rates on.
An Ounce of Prevention
Storm damage from hurricanes and high winds can be reduced and often eliminated by making low and moderately costed improvements. Residents of hurricane prone areas pay a higher rate for their homeowners insurance because the potential for wind damage is so much greater, but the easy addition of roll down window shutters virtually eliminates the danger of broken windows from wind and flying debris.
Hurricanes and other major wind events can lift off the entire roofs of a house, leaving the interiors exposed to the elements and providing a double dose of damage. This happens because most roofs are not securely attached to the walls of the house – instead, they’re often held in place by little more than their own weight and gravity. Having a licensed contractor add inexpensive brackets to roof trusses and attaching them to exterior walls may be enough to stop them from blowing off.
Storm damage from hurricanes and high winds can be reduced and often eliminated by making low and moderately costed improvements
**Reduced Risk = Reduced Premium**
Living in paradise comes at a price; California homeowners know this all too well. Damage caused by earthquakes range from broken dishes to complete structural collapse and insurance companies base their rates on this very real risk. However many older structures can be reinforced to make them more earthquake resistant and thereby decreasing the potential for damage which can result in a lower homeowners rate.
The threat of wildfire exists throughout the American West with some places more prone than others. Homeowners may not be able to control lightning strikes or careless humans from starting wildfires but they can lower the risk of damage by keeping the area surrounding their homes free of combustible plants and shrubs, and using a higher level of fire resistant roofing material.
When it comes to lower homeowners insurance rates, there is a relatively simple order to things: you first need to understand why you are paying more and then you need to talk with your insurance agent about what you can do to lower your risk and lower your rates. Coming up with the right solutions is really that simple.
If You Rebuild It, They Will Pay
The final component of your homeowners insurance rate is replacement cost. If your home is damaged or destroyed by fire or natural disaster, the cost of repair and or replacement will have a big affect on the premium you pay.
Where you live makes a big difference in determining building costs. Labor and materials are far more costly in New York or Los Angeles than they are in Birmingham or Des Moines. That’s why your brother in-law who lives in a bigger home in Omaha pays a lower rate than you do for an small craftsman style cottage in Southern California.
While there is not a lot you can do about lowering building costs in your area in order to reduce your homeowners premium, you should be aware that there are two types of coverage: total replacement cost and actual cash value. These are two completely different things with very different rate structures.
Actual cash value refers to what your home is worth if sold. Replacement cost refers to how much it would cost to rebuild. Homes are often more expensive to rebuild than their value when they are on the open market. So it is very important to be aware of the difference between the two when seeking to lower your homeowners insurance premium.
Actual cash value refers to what your home is worth if sold. Replacement cost refers to how much it would cost to rebuild
What We Didn’t Mention
It’s important to note that we did not discuss damage from water and flooding – this is because intentional because homeowners insurance does not cover water and flood damage. If flooding is a concern for you, please contact your insurance agent and discuss purchasing a separate policy from the National Flood Insurance program.