Compton homeowners insurance highest in California
Researchers from ValuePenguin reviewed California Department of Insurance data on the price of homeowners insurance policies from city to city.
Risk factors, construction costs among reasons Compton and L. A. homeowners insurance is 24 percent above state average; shopping around, higher deductibles, home security can lower cost
COMPTON – An often overlooked aspect of owning a home is the annual cost of having homeowners insurance. Homeowners insurance is designed to protect your home from what are called “perils.” A peril is your exposure to risk or something that causes loss or destruction. Examples of perils: theft, fire, vandalism, fallen trees, or water damage (excluding floods, which often requires separate flood insurance). Usually, your insurance policy covers only the perils specifically noted in the policy. You should always verify what is covered in your specific policy.
As a homeowner, there are typically three types of home insurance policies, often priced based on the number of perils you want covered. Every insurer fine tunes the policies, but here is an overview:
- Homeowners policy basic form 1 (HO 1) – this provides coverage for direct damage to property, personal liability coverage, and medical payments to others.
- Homeowners policy broad form 2 (HO 2) – this insures the described dwelling, private structures in connection with the dwelling (storage, garage), unscheduled personal property on and away from the premises, and loss of use. This is in addition to what is covered in HO 1.
- Homeowners policy special form 3 (HO 3) – this level has all the coverage of HO 1 and 2, but defines more precisely what is paid in the event of a claim.
Research uncovers average price in California
Researchers from ValuePenguin reviewed California Department of Insurance data on the price of home insurance policies from city to city – 14,000 quotes from 54 different insurance providers.
On average, for a sample home, the cost of a 1-year HO 3 insurance policy in California is $773. The ValuePenguin study illustrates how prices differ for a single benchmark property – a single family dwelling with frame construction, $200,000 coverage, and a $500 deductible – across California, in order to give consumers information that can help with important financial decisions such as where to buy a home.
Across the 222 cities and towns surveyed, ValuePenguin found the average price of homeowners insurance in California to be $773.
Most expensive homeowners insurance premiums in California
The cities with the most expensive homeowners insurance rates in California are all located in or around Los Angeles. The cost of insuring the benchmark home in these places was $949 per year. Many different factors can account for higher insurance prices – including crime rates, an area’s propensity for extreme weather, labor and construction costs, and more. As a result, it is difficult to accurately pinpoint the exact reason prices are higher.
The ValuePenguin study revealed home insurance rates in Compton to be well above the state norm. The mean cost of insuring a home for $200,000 in Compton would typically cost $958.
Homeowners in cities around Compton faired slightly better:
While the average price of home insurance in California is $773, the actual rate can vary significantly among different companies, so shopping is important. The difference between the cheapest and most expensive home insurance providers can be as much as $1500 year-to-year.
Check out the full analysis here.
Why the rate is so high for Compton
Although it has improved from year-to-year recently, the violent and property crime rate in Compton is still high among cities researched by the insurance companies. “Based on our research, anytime a city/town has a higher-than-average crime rate, home insurance premiums tend to move up as well,” said Brian Quinn, founder of ValuePenguin.
Another factor in higher premiums: the number of claims being made by existing clients in the area. The more insurers must pay out on claims of customers experiencing thefts, vandalism and other perils, the higher the risk for future payouts by the insurance company. This higher risk is passed on to premium payers.
Acts of God require more coverage
U.S. insurance law allows homeowner insurance companies to deny coverage for natural disasters that are beyond human control. These are known as ‘Acts of God.’
This is why a standard homeowners insurance policy in California does not cover earthquake or flood damage. Added protection from these perils is a big consideration when shopping for insurance because seismic activity is frequent in California, and because California is a coastline state. When shopping for homeowners insurance be sure to ask about this type of coverage. Depending on where you live, this type of insurance might even double the cost of the premium, or require you to be insured by a separate, specialized insurance company.
How to influence the premium you pay
There are steps you can take to help drive the cost of your insurance down.
- Shopping around and getting quotes from multiple companies. Different insurers may specialize in different areas so it is important to search for the best rate for your neighborhood among various companies.
- Having a higher deductible helps lower the monthly premium expense. If you are comfortable with having a higher deductible, this will help lower the monthly expenses on the policy. The amount you will have to chip in later to repairs or replacements will be high, so consider your tolerance for pulling from your nest egg in the event of a peril.
- Improving your home security can earn you premium discounts. Installing items like smoke detectors, an alarm system, dead bolt locks, a sprinkler system, etc. can chip as much as 15% off your premium with some insurers. Be sure to mention if your home is equipped this way when you are getting quotes. If you are already insured, before spending the money on such items make sure your existing insurer will extend you discounts.
Courtesy ValuePenguin and ComptonHerald.com staff