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Going Rural Could Lower Insurance

Insurance rates vary across the country. But a recent study conducted by the Insurance Research Council (IRC) found that suburbia and rural settings are cheaper for homeowner's insurance.

The study focused on eight cities - Chicago, Detroit, Los Angeles, Milwaukee, New York City, New Orleans, Philadelphia and St. Louis - and looked for variances in insurance losses and premiums from city to city. It also noted how moving outside the city limits could help lower costs.

Here is an overview of what they discovered:

  • Insurance losses are more frequent and cost more per claim in the city than in communities immediately adjacent to the city itself. This is good news for homeowners who want to live in suburban areas or rural ones.
  • The frequency of claims in the eight cities was 18% greater than neighboring areas.
  • The average amount paid per claim was 20% greater in the cities than in the areas outside city limits. The average inside the city limits was $3,155 as compared to $2,619 for surrounding areas.
  • When the frequency of claims was combined with the cost of paying the insured losses, the study showed that the average loss cost for a city dweller was 42% greater than the cost faced by homeowners living outside the city boundaries.

    This data shows that living outside the city limits could mean less money paid out for homeowner's insurance. In some cases, just living five miles from downtown could mean more money in your pocket. Once you cross the city line, you are saving.

    The study also examined how insurance claims break down for urban areas. Here is a quick look at where your insurance dollars are likely to go:

  • While theft may be the most popular claim going by frequency it falls short of being the most costly.
  • Liability settlements and fires top the top cost list for individual claims.
  • Fire and water topped most cities as the most predominant claims.

    What does this mean to the average homeowner? Make sure you are covered for the correct amount for liability and fire replacement. Sure you may be afraid of coming home and seeing your TV is gone, but a fire could hit you a lot harder in the pocketbook.

    Knowing how to lower costs and insure your home properly are key factors for any homeowner. Use the information above to re-evaluate your policy. Be sure you are covered.

    Source: Based on information from the Insurance Research Council and Money Magazine.

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