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How does where you live affect your home insurance premiums?

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Location is more important than you may think when it comes to home insurance.

Insurers take into account an area’s crime rate as well as its susceptibility to fires, storms and other natural disasters when setting your insurance premiums. Knowing how to assess risk levels can help you make sure you’re finding the right type of homeowners insurance and that you aren’t paying too much for it.

Crime and home insurance

Homes built in high-crime areas generally cost more to insure because there’s a higher chance of theft or property damage.

  • Will I pay more? If you live in an area with an above-average crime rate, you’ll likely pay more for homeowners insurance.
  • What should I look for in a policy? Insurers will typically break crime down into separate categories such as theft, malicious acts and riots or civil commotion. It’s worth looking for all of these separately in your policy.
  • What does insurance cover? Malicious acts usually covers vandalism and deliberate property damage. Theft covers the value of stolen possessions and break-in damage. Riot and civil commotion can cover damage caused by both activists and authorities.
  • What doesn’t insurance cover? Deliberate damage by someone living at your address or acts of terrorism.

Environmental risks and home insurance

If your home is located in an area that’s prone to environmental disasters, you’ll likely more more for homeowners insurance. How much more depends on what specific risks your home faces.

Impact or collision

This refers to damage to your home or belongings caused by an impact. This might include a car crashing through your wall, a tree branch falling on your roof, falling parts of an aircraft or debris blown by the wind. Often this category will also include damage caused by animals.

  • Will I pay more? If you live in an area that’s prone to high winds, or is otherwise at an unusually high risk for impact damage, your policy may cost more.
  • What should I look for in a policy? Check precisely what types of impacts are covered, and look for any exclusions that might apply to you. For example, if you live directly beneath an airfield, you might want to check that you’re covered for any fallen aircraft debris.
  • What does insurance cover? Damage caused by something accidentally colliding with your house or belongings.
  • What doesn’t insurance cover? Damage that is better claimed against other sections of the policy. A brick thrown through your window, for example, is more likely to be claimed against the malicious damage section of your policy.

Fire

This refers to any sort of accidental fire damage, including house fires and wildfires. While fire damage is covered by most homeowners insurance policies, homeowners in high-risk areas may benefit from supplemental fire insurance.

  • Will I pay more? If you live in a wildfire zone, you will likely pay more for homeowners insurance. If you’ve had a house fire in the past, that may also affect your rates.
  • What should I look for in a policy? Check how you’re covered for wildfires. While a typical policy will cover wildfire damage, it can be excluded from coverage in certain areas.
  • What does insurance cover? Damage caused by a fire that was set on accident or was outside of the homeowner’s control.
  • What doesn’t insurance cover? Fires set intentionally or recklessly. For example, while an electrical fire would likely be covered, a house fire caused by setting off firecrackers indoors usually won’t.

Storms

Storm damage can refer to tornadoes, hurricanes, high winds or other types of storms ⁠— but each policy may classify different storm types differently. It does not include flooding.

  • Will I pay more? How much you’ll pay depends on how risky your area is and what type of storms it’s prone to. For example, areas that are prone to hurricanes will likely cost more than areas that are just prone to the occasional rainstorm. As a general rule of thumb, the more financial damage a storm type will do, the more it costs to insure a home that’s at risk for getting hit.
  • What should I look for in a policy? Check for exactly what types of storms your covered for and if there are any exclusions you need to be aware of ⁠— especially if you live in a high-risk area.
  • What does insurance cover? Damage to the building or your possessions caused by storms such as tornados, rain, hail, snow and wind.
  • What doesn’t insurance cover? Flood damage or the costs of bringing your home up to code while rebuilding.

Lightning

Lightening strikes, as well as resulting fires, are covered in most homeowners insurance policies.

  • Will I pay more? All homes are at some risk of lightning damage, and lightning risk is generally not a major factor in homeowners insurance costs. But if your home is at high risk due to its location, for example an exposed location at a high elevation, or its construction, you could potentially see a higher rate.
  • What to look for in a policy. Check with your insurer to find out the specifics of how you’re covered for near-miss lightning that damages your home, ground surges and electrical surges caused by nearby power lines.
  • What does insurance cover? Coverage generally includes your home’s structure, electrical wiring, appliances and electronics or personal items in the home.
  • What doesn’t insurance cover? Insurance may not cover additional costs if you want to bring your wiring up to code or update it throughout the home after a lightning strike. It may also not pay out for damage caused by a ground surge or near miss.

Environmental risks not covered by homeowners insurance

Not everything that can potentially damage your home will be covered by your homeowners insurance policy. If you’re at risk to certain environmental factors, you may need to pay for additional coverage.

Flooding

Homeowners insurance does not cover damage due to flooding. If you want to protect your home against floods, you’ll need to purchase a flood insurance policy through the National Flood Insurance Program (NFIP) or a private flood insurer.

  • Will I pay more? Yes. Flood insurance requires you to purchase a separate policy, which will cost more. And NFIP flood insurance premiums are based on the risk of your home, which means that homes in areas that are likely to flood will cost more to insure.
  • What does insurance cover? Homeowners insurance doesn’t cover flood, but a flood insurance policy can cover damage to your building and its contents, including electrical and plumbing damage.
  • What doesn’t insurance cover? Flood insurance generally won’t cover damaged outdoor furniture, decks, fencing, swimming pools, landscaping or septic systems.

Earthquakes

Earthquake damage usually won’t be covered by a homeowners insurance policy⁠ — but it’s worth it to double check. If you live in an area at risk for earthquakes, you may want to consider taking out earthquake insurance.

  • Will I pay more? Yes. Earthquake insurance requires you to purchase a separate policy, which will cost more. And the higher the likelihood of getting hit by an earthquake, the more you’ll have to pay to get insured.
  • What to look for in a policy. Check to make sure there are no gaps left uncovered by your earthquake insurance and homeowners insurance. For example, if an earthquake causes a fire, will your homeowners insurance cover it?
  • What does insurance cover? Homeowners insurance generally won’t cover earthquakes, but earthquake insurance can cover damage to your home and your belongings caused by a movement of the earth.
  • What doesn’t insurance cover? Damage caused by the earthquake that is more aptly claimed under a different section of the policy.

Compare your home insurance options

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Bottom line

If you live in an area where your home is likely to be damaged, homeowners insurance is going to cost more. But how much more depends on how risky your area is ⁠— and how good of a deal you get on your insurer. To save on your policy, compare homeowners insurance companies to find one that fits your budget.

Frequently asked questions about home insurance by address

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