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What is High Risk Homeowners Insurance?

By Compuquotes Team on March 27th, 2008

Homeowners Insurance

To most people, the term "high-risk insurance" means insuring against earthquakes, floods, hurricanes and other natural disasters. If you live in certain parts of the country more likely to be affected by these natural disasters, you will probably pay more for your homeowners' insurance.

Not everybody needs earthquake insurance of course. But if you do live in an area of the country prone to earthquakes, such as California, consider taking out extra coverage. In fact, California law requires insurance companies to offer earthquake insurance to homeowners - although they aren't obligated to take it. Surprisingly, earthquake insurance is actually available in most states.

The amount of coverage and extra premiums will depend on several factors such as the age of your home and the material it is made from. And many homeowners don't realize that their insurance doesn't cover flood damage. Flood insurance is mandatory for those in high risk flood areas, such as along the coast.

However, there are other factors which classify you as being high risk that might surprise you. If you live in an area particularly prone to high crime rates or fires, you are classified as high risk. Sometimes your zip code alone can determine whether you are high risk or not.

If you have such things as a wood-burning stove, a swimming pool that's not fenced in or your house is a major "fixer upper", you will almost certainly pay more for your homeowners' insurance. If you have power tools or gardening implements in your yard, or your home is prone to mold contamination - you may be high risk.

Insurance companies also tend to disapprove of home owners who frequently file claims. Most insurance companies will consider you to have high risk potential, if you file two or more claims within two years - regardless of where you live.

If you do have the misfortune to be labeled high risk, what can you do about it other than move house? In this case, it is especially important to shop around and compare rates for your homeowners' insurance. The internet has made it easier to compare and purchase insurance - most online quotes can be obtained in a few minutes.

The chances of you being denied insurance altogether are slim - only around 1% of homes across the United States are considered "uninsurable". However, if you are refused coverage, the first step should be to ask the insurance company why. It may be something in your home that can be easily fixed.

One thing you can do if you feel your insurance premiums are too high - or if you have been denied insurance coverage altogether - is check with your state as to whether they have a Fair Access to Insurance Requirement Plan (FAIR) An estimated 600 people per month take out this insurance.

Over 35 states offer this coverage to high risk people who otherwise might not be able to purchase adequate homeowners' insurance. The disadvantage is that the premiums may be extremely high - in Texas, for example, homeowners pay an average of about $1000 per year.

There's no excuse to not have adequate homeowners' insurance. With a little bit of research and comparison shopping, every homeowner can be adequately covered.

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