Where you live will affect how much your insurance costs.
Where you live will affect how much your insurance costs
Did you know that where you live could make a big difference to your homeowner’s insurance premiums? For instance, if your house is in a flood plain or an area at a higher risk of severe weather or natural disasters, you will likely have to pay more for homeowner’s insurance.
Therefore, it is important that you take into consideration the surroundings of a home before purchasing. However, there are still conditions to be aware of such as high crime rates in particular areas and whether you are in close proximity to bodies of water.
Standard Home Insurance
What does Standard Home Insurance Cover?
A standard home insurance offers homeowners protection against financial loss in case of disasters like theft, accidents, and fire. Home insurance comes with different coverages, and it is up to the homeowner to choose the policy that suits them best. For example, if you select a coverage that protects the structure of your home, you are protecting your home’s physical structure (ex. Walls and roofs) as well as any structures attached to your home (ex. Garage). A standard policy also offers protection for personal belongings and additional living expenses.
Weather affects your insurance
If you live in an area with extreme weather, your home insurance premium will be higher than someone who lives in an area with relatively mild weather. However, most insurance providers are mostly concerned with how severe the weather is. Consequently, investing in home insurance is critical especially in areas prone to natural disasters like hurricanes, wildfires, flooding, and tornadoes. Most regions on the East Coast, like Florida, are high-risk areas. This means that although you may own the exact home as your friend living in a low-risk area, your premiums will be higher because you are more at risk.
Does insurance cover floods?
A homeowner's policy does not cover flooding. Therefore, you will need to purchase separate flood insurance to protect your home against floods. Flood insurance is more costly if you live near a body of water due to higher risks of flooding, especially if there is a tornado.
Crime rate of your neighborhood
One of the factors affecting your home insurance premiums is the crime rate in your neighborhood. If you live in an area prone to burglaries or vandalism, your insurance will be up. Insurance companies are aware that if a person lives in a high-risk criminal area, the chances of them filing a claim are high. Even if you have never been a victim of robbery, your rates will still increase. Insurance companies will base the rates on collective risk rather than your personal experience. Most locations that are safer tend to be more costly than areas with a high crime rate. However, when you are looking for a place to move, it is better to choose the safer neighborhood despite the higher cost. Although the housing is more costly, you will not have to constantly worry about the security of your home and family members. Additionally, it will help reduce your insurance costs.
Living near law enforcement
Living near a police station could potentially lower your home insurance rates. There is a low chance of a burglar breaking into a home near a police station. However, even if they manage to, when the homeowner raises the alarm, the police will likely be there in a short time and arrest the robber before they get away with anything. Consider a scenario where you live one hour from a police station vs. someone who lives 10 minutes from the station. The damage a burglar is likely to cause in ten minutes is very little compared to the damage a burglar will cause within an hour. To an insurance company, it is all about minimizing risks. They are likely to get fewer claims from homeowners near a police station, so the rates are lower.
Living near recreation facilities
Living near recreational centers like golf courses and tennis courts increases your insurance cost. There is a high chance that when people are on the court playing, stray shots may damage the roof, window or other exterior parts of your home. Stray shots may also hit you, a family member, or a guest, and this could cause bodily injuries. Insurance companies will consider all these potential risks when deciding your rates.
How to lower insurance
Some of the things you can do to lower your insurance include:
- Installing a security system in your home. The chances of your home being robbed when you don't have a home security system are high compared to when you have it. One important security measure is having outdoor lighting on at night. When your home is well lit, it can be hard for a thief to break in as they know the homeowner is likely to see them and raise the alarm. This is something that insurance companies factor in when deciding rates, and when they see that the risk of you being robbed is high, then your rates go up.
- If you live in an area prone to to flooding, invest in flood openings and elevate your home a bit higher to minimize the amount of damage
- Get rid of old structures. Some home structures that you are paying for in your policy may be completely unnecessary. For instance, taking down an old shed that is already on the verge of collapse.
- Replace the roof. This is particularly important if you live in an area prone to wildfire or strong winds. If your roof is old and worn out, replace it with a wind or fire-resistant roof. This can help you get lower deductibles when purchasing insurance.
The location has a significant impact on your insurance. Therefore, when moving into a new place, you may want to consider how that will affect your insurance cost. If an insurance company believes that a particular area is a high-risk area in terms of security and natural disasters, the insurance rate will increase.On the other hand, when the risks are few, the insurance will be low as well. In case you still purchase a home in those high-risk areas, then take the necessary measures like install a security system to reduce risks.