The most important factor when buying real estate is location,and as you might expect, it’s a significant factor in establishingrates for homeowners insurance as well. What is the average premiumfor a house worth $300,000 in Georgia compared to one inneighboring Alabama or Florida? What’s the average nationwide?


Panelists at the Property/Casualty Insurance Joint Industry Forum 2015 on Jan.13 acknowledged downward pressure on rates, especially forhomeowners policies because they aren’t seeing much growth in newhome sales. With that trend in mind, if you’re pricing policies andrenewals in different locations, it’s helpful to know what the mostrecent data on the cost of homeowners policies shows.


The National Association of Insurance Commissioners (NAIC)released its 2012 Homeowners Insurance Report on Jan. 20, providingdetailed data on market distribution and the average cost by policyform and insurance amount of homeowners insurance across the U.S.The report provides countrywide and state-specific premium andexposure information for standard noncommercial dwelling fireinsurance and for homeowners insurance package policies (HO-1,HO-2, HO-3, HO-5 and HO-8), tenant policy HO-4, andcondominium/cooperative unit owner’s policy HO-6.


The 2012 report, available for free download on the NAICwebsite, includes some interesting statistics as well asdetailed charts.

  • In 2012, homeowners owner-occupied policy exposures accountedfor 76.8% of overall exposures countrywide.
  • Tenant and condominium policy exposures accounted for 21.3% ofthe total, while dwelling fire exposure made up the remaining1.9%.
  • Approximately 53.2% of policies sold in Washington, D.C. in2012 were tenant or condo/co-op policies, reflecting the high levelof urbanization.

Here are several key factors affecting the cost of insurancethat also were identified in the report.

  • Geographic areas. Generally, the more denselypopulated the location, the higher the real estate values andconstruction costs. You’ll also find relatively higher real estatevalues in vacation and retirement areas.
  • Construction costs. The type of residence, theavailability of building materials, local climate and buildingregulations all affect construction costs. Premiums also reflecthigher expected repair costs for designs intended to reducestructural damages from earthquakes or hurricanes, forexample.
  • Degree of exposure to catastrophe. Homeownersinsurance premiums also are affected by the degree of exposure tocatastrophes, for example, a waterfront property exposed tohurricanes or a mountaintop property exposed to brush and forestfires. According to the Property Claims Services unit of theInsurance Services Office, an event is a catastrophe if it resultsin insured losses that total $25 million or more.
  • Stricter building codes. After majorcatastrophes like Hurricane Katrina or Superstorm Sandy many stateand local governments enact stricter building codes in an attemptto minimize damage and losses from future catastrophes.
  • Economic factors. Such economic factors asinflation increase the amount of insurance premiums over time.Interest rates and inflation can affect not only the value of thereal estate and building but also the price of the insuredcontents.

These factors as well as others listed in the report can resultin wide variations in premiums, not only by region or state, but onlocal levels as well. It pays to shop around, and consult youragent or broker for the best policy for your location.

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Rosalie Donlon

Rosalie Donlon is the editor in chief of ALM's insurance and tax publications, including NU Property & Casualty magazine and NU You can contact her at [email protected].