Variance Of Home Owner Insurance Costs Across U.S.

There is a variation in home owner insurance cost from region to region across the United States. This variation in cost is due to the regional nature of housing prices and the amount of insurance necessary to provide adequate protection in the event of a loss. These differences can also be due to the exposure to certain risks that are unique to one area and not so common in another part of the country.

Potential for Loss

For example, home owner insurance costs in California will be influenced more by the potential for loss due to wildfires and drought. These conditions due not have the same impact on home owners in Midwestern states such as Iowa, Kansas, Nebraska and Wisconsin, who are more susceptible to loss caused by tornados and wind damage. Residents of the Gulf Coast states of Alabama, Louisiana and Mississippi are concerned about loss from hurricanes and floods.

Risk Classification

Given these different factors, insurance companies look at the country from a standpoint of classifying risks that are most common to a region and rating it accordingly in order to come up with a rate classification. Classify risk on this basis helps the insurance company understand the nature and potential of the risk occurring, as well as whether such a risk is ideal in order to insure. Idea risks are those that are predictable, happen to everyone and accidental in nature.

State Ranking

Home owner insurance that is offered in regions of the United States that are prone to greater risks to damage and loss are going to be more expenses than those homes that are not subject to such risks. On a state-by-state basis, the southern states of Arkansas, Louisiana, Mississippi, Oklahoma and Texas have the highest home owner insurance rates. Idaho, Nevada, Oregon, Utah and Wisconsin have the lowest rates in the country for home owner insurance coverage.

State Regulatory Effect on Rates

State laws and regulations can also play a part in the variance among regions in home owner insurance rates. The more regulated an insurance company is in a state or region with respect to required coverage, limits and amounts, the more expensive the policies will be. With premiums ranging from the mid-$300s to over $1,100 for the same level of home owner insurance protection, it is easy to understand the influence some states may have over the price of insurance and its effect on cost.

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