why do homeowners insurance rates vary by state?

Whether you've just moved out of state or are simply curious, you may be wondering why homeowners insurance premiums change depending on where you live. From state to state, city to city, and even neighborhood to neighborhood, rates can fluctuate for a number of reasons — let us explain some of the most common.

1. local construction costs

When purchasing homeowners insurance, you'll want to choose enough coverage to fully pay for the cost of rebuilding your house from the ground up should catastrophe strike. So if local construction costs are higher or lower in the area you just moved to, this will likely affect how much homeowners coverage you need to carry.

For example, if rebuilding costs are less expensive in your new area, you likely wouldn't need as much home insurance coverage and you could see your premium go down. Construction costs are affected by things like the population density of your locale, type of home you have, climate, availability of materials, and building regulations.

2. your home’s exposure to hazards

Whether you live in a coastal area, a location with higher burglary rates, or Tornado Alley, your home's exposure to perils will typically affect how much your homeowners policy costs because of your increased likelihood of filing an insurance claim. On the other hand, if you move to a city or state with a lower risk of theft, storm damage, or wildfires, for example, you could see a significant decline in homeowners premiums.

3. building codes in your locality

Some state and local governments have enacted stricter building codes that can require the highest quality and most weather-resistant materials — namely due to perils like hurricane winds, wildfires, or earthquakes and other land movement. If you live in an older home and experience a catastrophe that levels your place, you could be forced to rebuild according to updated building codes, which can be significantly more expensive.

4. your proximity to a fire station

When considering new locations, you may want to consider the neighborhood's proximity to a fire station. Not only does this help keep you and your family safer, but it also reduces the fire department's response time, which can make a huge difference in how much fire damage your home suffers. Generally, the closer you live to a fire station, the lower your homeowners insurance premium will be since fire-related claims in your vicinity are typically not as costly.

5. state regulations

Your state insurance department regulates how insurers calculate homeowners premiums where you live. While some states allow insurance companies to incorporate your credit score into your premium, for example, other states make it illegal. In addition, the department of insurance does allow insurers to increase or decrease premiums, but controls the extent to which insurers can do so (typically annually, at the most, and only by specific amounts based on actuarial information).

The truth is, though, many states don't need to increase insurance rates very often at all, unless there's a very specific reason to do so — like a significant rise in the number of major storms affecting an area, or a spike in inflation that would cause the cost of building materials and labor to go up.

other factors that can affect homeowners insurance premiums

Location, location, location — it's a big deal to both homeowners and home insurers alike, but it's certainly not the only factor that matters. There are a number of other contributors that help determine your insurance premium, including:

  • The type, age, and condition of your home
  • Any attractive nuisances you have on your property, like a pool or trampoline
  • Insurance history, including past claims
  • Your insurance score, which, in some states, may include your credit score
  • The breed of dog you have, if applicable
  • Your home insurer's ability to take on risk

gain affordable, dependable protection for your home from esurance

No matter where you live, Esurance offers customizable homeowners policies that don't drain your bank account; so you can tailor home coverage that feels right for you and your situation. Plus, we provide customer service, the financial strength of an Allstate company, and cutting-edge online technology to help simplify the insurance process.

When you get your quick, free homeowners insurance quote online be sure to explore our selection of coverages that help financially protect your abode, belongings, personal liability, and more. And while you're at it, check out our myriad discounts to see how much you could start saving on reliable home insurance today. You can also give us a ring at 1-866-439-5633 where we're standing by to help you get a quote and answer any questions you may have.

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