Dr. Kai-Fu Lee’s innovation workshop investment, the US real estate service platform that understands Chinese best, provides a one-stop service for buying, renting, and lending.
For those who are new to the United States to buy a house and rent a house, be sure to have a good understanding of home insurance in the United States, because home insurance in the United States is essential. The US home insurance we usually talk about generally refers to the insurance that buyers buy for their own houses, which is the most basic insurance. If you buy a house with a loan, the lender will require you to purchase homeowners insurance before closing.
Types of home insurance in the US
Home insurance in the United States is divided into three categories: homeowners insurance, homeowners insurance, and earthquake insurance.
Homeowners Insurance: It means that the insurance company only provides homeowners insurance for the house where the homeowner lives daily. That is to say, a person can only buy one homeowners insurance, and the homeowner who owns several houses cannot buy the house outside the residence. Homeowners Insurance.
Residential Insurance: There are many types including basic resident insurance, comprehensive resident insurance, special insurance, tenant insurance, comprehensive insurance, condominium resident insurance, old home insurance, etc.
Earthquake Insurance: Covers earthquakes, wars, nuclear accidents, floods, etc., usually excluded from most insurance terms. Mainly in the earthquake-prone West Coast of the United States, such as California, you need to purchase additional sub-insurance.
Home Insurance Premiums by US State
Based on data from Waijule, we found that the average cost of home insurance nationwide is $964. And home insurance rates continue to rise at a steady rate, rising by more than 50% in the past 10 years alone.
Below is a breakdown of home insurance costs by state across the United States.
States with the Highest Home Insurance Costs
The states with the most expensive home insurance are some of the most vulnerable to large-scale natural disasters. Two of those states are those in the Gulf of Mexico Florida, and Louisiana that was both victims of major hurricanes.
Florida’s coastline has been tested by hurricanes and tropical storms, and rightfully the average home insurance cost is the highest in the nation at $1,471 a year. And for Louisiana homeowners, home insurance is also a big expense. Hurricane Katrina made landfall on the outer coast of New Orleans on the US Gulf Coast 12 years ago with winds of 233 kilometers per hour. The entire disaster area is almost the size of the United Kingdom and is considered one of the costliest natural disasters in American history.
On top of that, Oklahoma is also one of the most expensive states to insure, with more tornadoes per square mile than anywhere else in the US (and a recent earthquake).
The states with the lowest home insurance costs
If you want to avoid earthquakes, hurricanes, tornadoes, and other natural disasters, these five states with the lowest home insurance costs are all great places to live. Four of these states are located in the western United States, including Oregon, Idaho, Nevada, and Utah. Another fifth state is Wisconsin, which has few natural disasters, and the cost of natural home insurance is much lower. It’s worth noting that the cost of home insurance in these five states is not even half that of Florida.
US Home Insurance Claims Process
According to the Insurance Service Bureau (ISO), more than 98% of home insurance claims are due to property damage. So what is usually the main cause of property damage? The US Insurance Services Bureau compiled data from 2008 to 2012 and listed the following top causes of home and property damage:
- Hurricanes and hail (3.37)
- Flood and freezing damage (1.79)
- Other property damage (1.04)
- Theft (0.52)
- Fire, lightning, and debris damage (0.43)
Note: Numbers in parentheses represent the proportion of occurrence per 100 households.
Although they purchased home insurance, most homeowners in the United States did not pay attention to the detailed regulations of home insurance, nor did they know the scope of home insurance claims. Nearly half of the homeowners do not know the content and details of the home insurance. Often, when an accident occurs and the home is damaged, they spend money to repair the home but cannot get compensation. So what do you do when you need to settle a claim?
STEP 1 Submit proof
The homeowner must report the loss within 60 days after the house loss occurs, fill in the “Proof of Loss” and submit it to the insurance company. The various items of loss (items) should be listed in detail on this form and their value noted. Each item in the table is listed as an item, but the various prices are separated. It is best to report the loss by room so that the insurance company can review it.
STEP 2 Converted Price
All property damage is discounted (except where replacement cost insurance is purchased). The depreciation rate of each item is different, and the insured should try to provide the original receipt or the photocopied receipt as the basis for verifying the loss. Many Americans usually make a list of all the items in the house, store it in a fireproof safe together with the receipt of purchase, and store it in the safe of the bank, which can be used when applying for claims. If the original receipt of the lost item is missing, the procedure is relatively complicated, and some methods such as an affidavit are required.
STEP 3 Rights Protection
If an insurance company has a bad business style and fails to settle claims by regulations and contracts, the insured should write down the reasons for the entire incident and keep a copy of the letters communicated with the insurance company so that they can find a lawyer to sue the insurance company.
The time frame for a home insurance claim is as follows:
- Submit a “Proof of Loss Form” to the insurance company within 60 days of the event;
- The appraiser is selected within 20 days of the notice of appraisal issued by the insurance company;
- If you disagree with the insurance company’s claim, you must file a lawsuit within 12 months of the loss;
- If the vacant building has been insured for less than 60 days at the time of loss, the insurance company will not pay.
Ways to Lower Home Insurance Costs
The price you pay for home insurance can vary by hundreds of dollars depending on the coverage you buy with different insurance companies. Here are some factors to consider when buying home insurance to help you lower your home insurance costs!
1. Raise your deductible
The deductible is the amount you must pay for a loss before the insurance company can start a claim, according to the terms of your insurance. A higher deductible means you save more money on insurance. Most insurance companies now recommend a deductible of at least $500. If you’re able to raise your deductible to $1,000, you’ll save 25% on your insurance costs.
2. Improve housing resilience
Find ways to make your home more resistant to storms and other natural disasters from your insurance agent or insurance company representative. You might be able to save money on your insurance by adding storm shutters, strengthening your roof, or buying stronger roofing materials. Additionally, the risk of fire and flooding can be reduced by modernizing your heating, plumbing, and electrical systems.
3. Improve family safety factor
Generally, you can get at least 5% off by installing smoke alarms, burglar alarms, and anti-theft locks. Some insurance companies are even willing to offer a 15% to 20% discount on insurance premiums if you’re willing to install an advanced sprinkler system and a fire and burglar alarm that will notify police, fire, or other monitoring stations in an emergency.
4. Maintain a good credit history
Building a solid credit history can lower your insurance costs. Insurance companies are increasingly using credit information to price home insurance. In most states, your insurance company must promptly notify you of any adverse measures such as higher interest rates, and you should also verify the accuracy of the information provided by the insurance company.
5. Choose the same insurance company
If you have been insured with the same insurance company for several years, you may be eligible for a special discount as a long-term policyholder. Typically, if you’ve been insured with an insurance company for three to five years, you’ll get a 5% discount on your insurance premiums; if you’ve been insured for more than six years, you’ll get a 10% discount on your insurance premiums. In addition, it is also very important to shop around to choose a good insurance company!