Getting Home Insurance in Chicago
Purchasing the right home insurance policy is crucial for Chicago residents. Homeowners insurance in Chicago helps keep you and your family from facing the brunt of the costs associated with having to repair or replace your home and personal belongings if they are damaged or destroyed by fire, severe weather, vandalism, or theft. Most policies will usually cover the cost of additional living expenses, such as food, lodging, and storage, if you are displaced from your home because of fire or damages. Most policies also provide liability coverage in the event someone is injured on your property due to your negligence. The Insurance Information Institute’s Insurance Handbook recommends that homeowners extend liability coverage to at least $300,000. Most basic policies only extend coverage up to $100,000. They also recommend that you consider an umbrella policy that provides up to $1 million of coverage with most policies.
The average premium in the state of Illinois is $789, according to the Insurance Information Institute. This is lower than the U.S. average of $880. If you are unable to insure your home through a traditional policy, you can apply for the Illinois FAIR Plan, which was created to provide coverage for homeowners who cannot purchase a typical policy for reasons beyond their own control.
Factors of Home Insurance Rates in Chicago
Insurance companies rely on several factors to determine the rate of a policy in Chicago. In most cases, the most significant factor in determining the cost of a specific policy is how much it would cost the insurer if your home were ever completely destroyed. Simply put, the more it would cost the company to rebuild or replace your home, the more it will cost to insure, according the National Associate of Insurance Commissioners (NAIC) Consumer’s Guide to Home Insurance. The age of your home and how it was constructed can also have a significant impact on your policy in Chicago as well. Older homes typically cost more to insure because, in most cases, they cost more to repair due to their aging infrastructure. Larger homes will usually come with higher premiums as well because there is more physical property and personal belongings to insure. Things like your home’s claims history, the claims history of nearby homes, and your home’s proximity to fire hydrants and stations will also be taken into account when determining the final policy price. Choosing to buy additional policies or higher coverage amounts will increase your premiums as well.
Lastly, the crime rate in your specific Chicago neighborhood will also impact the cost of your policy. If your home is in a neighborhood with high rates of theft, burglary, and vandalism, then you are likely to face higher premiums. You can get an idea of the crime rate in your neighborhood from the chart below:
Due to Chicago’s close proximity to Lake Michigan and the Chicago River, an abundance of heavy spring thunderstorms, and an aging sewer system, the risk of severe flooding is a constant threat for the city’s residents. According to the Illinois Department of Insurance’s Home Insurance Shopping Guide, Chicago residents can purchase a separate flood insurance policy that is insured by the National Flood Insurance Program (NFIP). You can purchase a separate flood insurance policy that covers up to $250,000 in flood damage that will cover structural damage, damage to your furnace, water heater, air conditioners, floor surfaces, and debris clean up, in most cases. Most companies will also offer an additional $100,000 worth of coverage for the actual damage to the contents of your home for an additional premium. You can also get an idea of the flood risk in your neighborhood through the Illinois State Water Survey’s floodplain map website.