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A homeowners insurance policy is an essential part of protecting your property and possessions. Standard coverage may not be enough, though, if you live in a high-risk area. High-risk home insurance is a specific type of homeowners policy for people who live in areas that insurers consider high-risk.
These areas are often prone to natural disasters such as hurricanes, earthquakes, floods, or wildfires. Whether you live in a coastal area, near a fault line, in a flood zone, or in a wildfire-prone area, high-risk home insurance can offer protection for your home and belongings.
High-risk homeowners insurance is a type of insurance for homes in high-risk areas, as well as homes or homeowners that have been classified as being at high risk for filing a claim. Not all insurance companies offer high-risk home insurance, however, so homeowners may need to turn to specialized insurance companies for coverage.
“With most standard options, if you have two or more claims in a five-year period, you will be ineligible to start a new policy with that carrier,” says Dominic Frey, an insurance professional at Hitchings Insurance Agency.
“Other minor factors that can impact your rate and eligibility are the presence of trampolines, pools, wood stoves, and dogs,” Frey says.
A few factors can contribute to a home being considered high-risk, such as:
Home age: Some homes, especially older ones, may pose a higher risk for electrical or plumbing issues and have more general wear and tear, landing them in the high-risk category.
Home location: Homes located in areas with high crime rates or severe weather are often classified as high-risk. For example, high-risk homes can be found in areas with a lot of theft and vandalism and in areas prone to hurricanes, windstorms, or tornadoes.
Structural issues: Old homes may have structural issues, such as an old roof or cracks in the foundation. These issues increase the likelihood of damage to the home, making it more risky and expensive to insure.
What makes a homeowner high-risk?
Several factors can cause a homeowner to be eligible only for a high-risk homeowners insurance policy, such as:
Claims history: A homeowner with a history of insurance claims is considered more likely to file additional claims in the future, making them a high-risk customer.
Credit score: Insurance companies may take your credit score into account when determining whether to insure your home. Insurers typically consider people with low credit scores as more likely to miss premium payments or file claims, which can make them riskier to insure.
Home use: Vacation homes and ones that aren’t regularly occupied have a different risk profile than primary residences. For example, a vacation home may be more likely to be damaged or vandalized when it’s not in use, making it riskier to insure.
Amenities: The presence of certain amenities, such as a pool or trampoline, can increase the possibility of accidents or injuries and affect a homeowner’s risk profile.
Animal ownership: Certain dog breeds — such as pit bulls, rottweilers, dobermans, labrador retrievers, and German shepherds — can result in a homeowner being considered high-risk. These breeds are generally viewed as being more likely to bite or cause property damage.
Allstate: Allstate is a well-known insurer that offers coverage for high-risk areas. Policies include lightning, wind, and hail protection. An earthquake plan is also available, and you can get flood insurance from Allstate through the NFIP.
Amica: Homeowners insurance from Amica includes coverage for perils like fire, lightning, wind, and hail. The company can also help you get flood insurance, and it partners with the California Earthquake Authority to offer earthquake insurance to California homeowners.
Liberty Mutual: A policy from Liberty Mutual protects against hurricane damage, water damage, wind, and hail. You can also get flood insurance through Liberty Mutual’s partnership with the NFIP.
Progressive: Progressive insurance covers fire, windstorm, and hail damage. Flood insurance is also available, but it’s provided through a third-party insurer.
Fair Access to Insurance Requirements (FAIR) is a home insurance program for uninsurable homes or homeowners. It’s a state-run option that specifically covers homeowners in high-risk areas who can’t secure coverage through the voluntary market, according to the International Risk Management Institute (IRMI).
FAIR plans offer different coverage from conventional insurance plans. They typically cover damage from fire, vandalism, riots, and windstorms. Some states also include liability protection. Additionally, FAIR plans in California provide coverage for brush fires, while plans in Georgia and New York offer wind and hail coverage for select coastal communities.
Most homeowners should consider other options before opting for a FAIR plan, which should only serve as a last resort.
“The policy is going to be very basic,” says Frey. “There aren’t many endorsements or discounts available.”
FAIR plans may also have higher premiums and deductibles than standard home insurance policies.
Good to know
Local governments control FAIR plans in most states. Contact the FAIR Plan administrator for your state to access coverage in your area. You may need to make improvements to your home to reduce the risk of fire, theft, or water damage before becoming eligible for coverage.
What should you do if your home is deemed high-risk?
It’s important to understand why your home is considered high-risk. You may be able to improve your risk profile and obtain standard home insurance by making repairs or taking other steps, such as replacing old shingles or fixing leaks.
Another option is to improve your credit score. Insurance companies often view homeowners with low credit scores as more likely to miss premium payments or file claims and qualify them as high-risk. Paying off outstanding debt or making on-time payments could help reduce your risk and qualify you for standard home insurance.
Certain risk factors may not be fixable, such as the location of your home or the way you use it. High-risk home insurance may be your only option if your home is in an area prone to natural disasters or if you use it as a vacation home.
What’s the best way to find high-risk home insurance?
Finding high-risk home insurance can be a challenge, but homeowners have several options, including:
Reach out to your current insurance company. You may be able to get high-risk home insurance through your current insurance company. Find out what options are available to you by contacting your insurance agent.
Ask your neighbors. If your home is in a high-risk area, ask your neighbors what insurance company they use. They may be able to provide you with recommendations for insurance companies that specialize in high-risk home insurance.
Shop around online. Shopping around online for an insurance company can be a great way to find high-risk home insurance. Compare coverage options and premiums from multiple insurance companies before buying a policy.
Consider a FAIR plan. If insurance companies have denied you coverage, consider a FAIR plan. The state-run insurance program can provide basic coverage and may be the solution to your homeowners insurance needs.
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High-risk home insurance FAQs
Navigating the world of homeowners insurance can be overwhelming, especially when it comes to high-risk home insurance. Here are some answers to the most commonly asked questions about high-risk home insurance.
What makes a house high-risk for insurance?
One of the most common reasons for a home’s high-risk classification is its location, particularly if it’s in an area prone to natural disasters. Structural issues, such as an old roof or outdated electrical or plumbing system, can also make the home high-risk in the eyes of an insurance company.
What is the 80/20 rule in homeowners insurance?
The 80/20 rule in homeowners insurance requires you to insure your home for at least 80% of its replacement cost to receive a full payout from your insurer after a partial loss. However, it’s advisable to insure your home for at least 100% of its replacement cost to minimize your financial burden in the event of a total loss.
What can you do if you’re denied homeowners insurance?
If an insurance provider denies you coverage, make sure you understand why. You may be able to fix the issue and reapply for insurance. If not, consider shopping for insurance from another company or researching your state’s FAIR plan as alternative options. FAIR plans typically offer limited coverage compared to standard plans and should only be used as a last resort.
Is there a certain type of home insurance for high-end homes?
Yes, insurance options are available specifically for high-end homes. Insurance companies like Nationwide, Chubb, and AIG offer high-value coverage for home insurance that can include tailored coverage and broader options, such as global coverage and higher limits. Research and compare insurance options for your high-end home before buying a policy.
Amy is a personal finance and technology writer. With a background in the legal field and a bachelor's degree from Ferris State University, she has a talent for transforming complex topics into content that’s easy to understand. Connect with Amy on LinkedIn.