Homeowners insurance companies decide whether to issue policies and set their rates based on risk. Many factors, including a house’s location, can influence its risk profile. In some cases, a home’s location makes it difficult to get homeowners insurance. If you find yourself in that situation, you may be able to find another way to get coverage.
How Location Can Affect Risk
Some parts of the United States are prone to severe weather, such as tornadoes and hurricanes. Houses along coastlines are susceptible to storm-related damage.
Factors related to a specific neighborhood can influence risk. Some areas are located far from a fire station or hydrant, and certain neighborhoods have high rates of burglaries and vandalism.
Any of these factors can make a homeowner more likely than average to file a claim or likely to file a claim for a large amount. Homeowners insurance companies may charge more for houses in those areas or may refuse to provide coverage at all.
What You Can Do If You Have Been Denied Insurance Coverage
If an insurance company turned you down because it considers your house too risky due to its location, ask if there is anything you can do to reduce the risk and qualify for coverage. An insurer may be more inclined to cover your house if you install storm shutters or a home security system or make other improvements to reduce the likelihood that you will file a claim.
You may be able to get a policy through another company. Each insurer has its own guidelines. Other people who live in your neighborhood most likely faced the same hurdles you’re facing now. Ask them how they got insurance for their homes.
Some states have programs for homeowners who can’t get insurance through a private company because their houses are deemed too risky. Fair Access to Insurance Requirements (FAIR) insurance plans may be available in your state. If you get a FAIR plan, expect to pay higher premiums than you would pay if you bought insurance through a private insurer.
Ask your insurance agent for advice. Your agent may be able to recommend a company that insures high-risk properties or refer you to a state program that can help.
Think About Insurance Before You Buy a House
You may fall in love with a house because of its location, but you also need to consider practical things, including insurance. If you’re currently shopping for your next home, think about whether you might have a hard time getting it insured. If you have doubts or questions, contact some homeowners insurance companies or consult your current insurance agent and ask. You may decide to pass on your dream house if you discover that getting insurance will be a major hassle or too expensive.
