Crime rates and insurance

Insurance companies have a number of factors to consider when determining your home insurance rate. Much of your monthly premiums will come down to your personal history and features of your new home. For instance, if you routinely file insurance claims, then you'll likely pay more each month because your provider will expect you to be a higher risk. Further, your home will have to be inspected to so your provider knows it's up to code and that there aren't any high-risk dangers present, like mold, electrical failure or a poor plumbing system.

However, other determinants are also taken into consideration. The location of your home plays a large role in calculating costs as well because certain areas are inherently more safe than others. As such, if you live in an area that is notorious for natural disasters, theft or crime, then you are essentially placing yourself in the path of an insurance claim. Your provider will note this because it heightens the chances that you'll need funds to cover any damage.

In the case of crime, finding a home that fits your budget while also getting cheap homeowners insurance can come down to selecting an area that has a lower crime rate.

A city's crime rate directly affects how much you might have to pay each month for insurance. 24/7 Wall St analyzed data from the FBI and found the top 10 safest states to be:

  1. Vermont
  2. Maine
  3. Virginia
  4. Wyoming
  5. Kentucky
  6. New Hampshire
  7. Idaho
  8. Utah
  9. Minnesota
  10. Montana

Living in one of these areas could garner you cheaper insurance because they have the lowest crime rates in the U.S.

Find a good area
While it's true that the safest neighborhoods tend to also be more expensive, it could be even more costly if you are in a particularly high-crime location. Even if you are not a victim of crime yourself, your rates may increase. That's because insurance companies offer rates based on collective risk, and if you live in a bad neighborhood, then your neighbors could file more claims, which will impact your rates.

It's vital that you weigh your options when searching for a new home because many factors are out of your control when it concerns insurance. What you can control, however, is where you decide to settle down. In many cases, your proximity to police stations, fire departments and emergency services can actually reap rewards for your personal safety and insurance expenses.

Increasing deductibles
If you aren't too worried about crime, then it could be financially beneficial to reconfigure your insurance policy with a higher deductible. Though you'll be paying more upfront in the event of a claim, you can also save money over the long run.

The fewer claims you file, the more advantageous it is to have a higher deductible because your monthly premiums will decrease as a result. Paying out of pocket infrequently is preferable to paying more monthly.

However, it's important to note that if you do end up filing claims under this strategy, you might be in for a rate hike in the future. The more claims you file, the more of a risk you are, thus leading to an uptick in monthly premiums to cover the costs of your damages.

Finding an insurance package that suits your needs and is consistent with the location of your home is crucial to keeping your insurance costs low. Otherwise, you could be paying too much while still not having adequate coverage.

Speak with your provider to see how you can create an insurance package that maximizes benefits while reducing unnecessary costs or coverage.

CoverHound can assist with all insurance inquiries with its convenient online quote platform.

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