Home Insurance Articles
How Location Affects Homeowners Insurance Rates
2010-02-11
A home's location can be as important as its structure for determining the price of its insurance. While home insurance is necessary for any homeowner wanting to protect what will likely be the most expensive purchase of their lives, its price can be significantly affected by where the home is built. While individual home factors, such as the year the home was constructed and what materials were used will be taken into account when a homeowners insurance rate is determined, what many homeowners do not realize is the effect that other homes in the area and the community itself can have on their insurance premiums.
There are three major factors that determine the premiums of any homeowners insurance coverage, outside of the condition of the home itself. The first is the home's proximity to services. How close is it to a fire station or police station? These are essential services valued by homeowners, and if the home is distant from them, it will mean saving the home in the event of an emergency will be made more difficult, and insurance rates will rise accordingly. This can come down to such details as where the nearest fire hydrant is located or if there is a streetlight on the same block as the house.
The second factor ties into the essential services issue. How safe is the neighborhood? A neighborhood which was once tree-lined and peaceful that has degenerated into a haven for drug deals or flop houses will be a higher risk investment for an insurance company, and therefore a higher home insurance rate for the owner will be the result. Crime statistics for any neighborhood are generally available through a real estate agent or the local police, so if considering a move, make sure to check out the neighborhood beforehand, both for peace of mind and home insurance premiums. As well, the general condition of the neighborhood will affect premiums. If the area is full of run-down homes with absentee owners or rented properties that are poorly maintained, the insurance company will again view this as a higher risk investment, and will pass that cost on to the homeowner. Higher premiums can serve as a warning to homeowners - if an insurance company's rates are excessive in a particular location, it is best to ask why.
Being aware of how the properties around a home influence homeowners insurance coverage is worthwhile for every homeowner. This ensures that not only does a new home buyer get the home that they want, but are also able to get the insurance coverage that they need at a price which is within their means.