The home can be a reservoir of hopes – for family, for work, and for ourselves. Home insurance can help protect these hopes, keeping your home safe from a number of damages and disasters, like fire and theft. Rhode Island home insurance is more expensive than most other states, which may be influenced in part by the state’s vulnerability to flooding from hurricanes, Nor’easters, as well as ordinary thunderstorms and storm surges.
- Fun fact: Rhode Island is home to the country’s oldest carousel, The Flying Horse Carousel, which opened in 1876.
Average Rates in Rhode Island
Home insurance in Rhode Island can be costly. Based on 2017 data from the Insurance Information Institute, Rhode Island ranked 6th overall in the nation for having the highest home insurance premiums – an average of $1,551, exceeding the national average of $1,211 by several hundred dollars. This puts Rhode Island in the company of other states with high home insurance premiums, like Kansas and Mississippi with $1,584 and $1,537 average premiums respectively.
Renter’s insurance in Rhode Island falls almost exactly on the national average – with $182 average premiums, it’s only $2 above the national average. Both California and Michigan also share the same average renter’s premium price as Rhode Island.
Rhode Island Legal Insurance Requirements
In Rhode Island, there is no legal requirement for you to buy home insurance. Even so, most mortgage lenders will make buying home insurance a condition of their loan. If you don’t buy home insurance on your own, you can be put onto a plan involuntarily. Home insurance obtained in this way tends to be more expensive than a plan you would choose yourself, and benefits the mortgage company more than you.
Rhode Island home insurance has some general coverage types:
- Dwellings, insuring you for damage to your home’s exterior, interior, and associated systems (like plumbing and electrical wiring). Oftentimes you can work with your insurance company to set the coverage limits of your dwelling insurance – often, it’s set at 80% of your home’s replacement value.
- Other structures insured for damage to structures not attached to the home – like tool sheds, guest homes, garages, and sometimes fencing and sidewalks. In Rhode Island, the standard limits for this coverage is 10% of your dwelling coverage.
- Personal Property. A common misconception is that personal property insurance can reimburse you for loss or damages to expensive luxury items, like gun collections, artwork jewelry or antiques. This is not the case – the insurance instead protects everyday items like furniture, appliances, and clothing, whether they are lost and damaged on your property or not. Coverage limit standards in Rhode island for personal property is 50% of your dwelling coverage.
- Loss of Use. This coverage will help you maintain your normal standard of living if you need to temporarily move to a motel or apartment after damage to your home renders it uninhabitable. Notably this coverage is for “extra” costs, and can include expenses from food, lodging/rent, storage and moving costs. You should hold onto receipts for expenses you incur for your insurance company to review. In Rhode Island, the coverage limit for Loss of Use is typically 20% of the dwelling coverage limit
- Personal Liability and Medical Payments. This kind of insurance has more to do with injury or damage to property that affects a person besides yourself or a family member. If you face a claim or lawsuit for negligence on your property resulting in injury or damage, personal liability insurance will help you pay for legal representation and fines. And in the case of accidental injuries to guests on your property, a certain amount of money can be used to pay for medical expenses like hospitalization and ambulatory services.
These types of insurances are offered in several “forms,” described below:
- The Dwelling Fire Form is the most basic type of insurance in Rhode Island, and is a kind of policy a mortgage lender can put you on if you neglect to renew your homeowners insurance policy. It can also be used to insure vacant homes such as vacation homes, unlike most home insurance. It covers only for the following perils, or damaging events: fire, smoke, windstorm, hail, lightning, explosions, vehicles, and civil unrest.
- The Basic Form insures your home for theft and vandalism, in addition to the perils insured by the Dwelling Fire Form. For older homes, the Modified Coverage Form is offered, which covers identical perils to the Basic form on an actual cash value basis rather than replacement cost.
- The Broad Form offers the same coverage as the Basic Form, plus damage from falling trees, the weight of ice or snow, and insurance for the sudden accidental rupturing, overflow, or freezing of plumbing, heating, air conditioning, and fire sprinkler systems
- The Special Form, rather than insuring named perils, offers coverage for all perils except listed exceptions, such as flood, earthquake, war, and nuclear accidents
- The Tenant’s Form and Condominium Unit Owners Form are also available – they offer Broad Form coverage to personal property. Condominium owners can also insure the walls and floor that they own within the condominium complex with Broad Form coverage.
Common Risk Factors in Rhode Island
Rhode Island’s Office of Emergency Management identifies the following major risks to Rhode Island homes:
- Severe Winter Weather – Average annual snowfall in Rhode Island falls above the national average. Roof collapse from the weight of snow and damage from routine ice storms pose a threat to Rhode Island properties. In 2015 for instance, Winter Storm Juno caused such widespread property and structural damage that federal assistance funds had to be requested to cover costs. Home insurance can only cover these types of damages if you have at least a Broad Form.
- Flood – Flooding is the most common type of hazard faced by Rhode Island property owners – whether it be from hurricanes along the coast, storm surges, winter Nor’easter storms, or flash flooding along riverbanks. Not only does water inundation weaken the structure of a home, making it liable to collapse, but it also can carry hazardous chemicals and detritus into the home. Home insurance does not cover flood damages – you must purchase this insurance separately through the National Flood Insurance Program. This is only available in participating communities, making gaps in flood insurance coverage across the state.
Insurance Demographics/Statistics in Rhode Island
So, what affects the price of home insurance? The answer is: a lot of things, ranging from the value of your home, to demographic information like local property crime rates or your home’s proximity to a fire station. There are even some things that will affect your home insurance price that are under your control, like heaving deadbolts installed or maintaining good credit. Below we explore some of the important information insurance companies consider when setting the price of home insurance premiums.
Your Home’s Value
Likely the biggest influence on the final price of your home insurance is your home’s value – it is upon your home’s value that the coverage limits for most of all your home insurance will be based. There are two ways insurance companies calculate home value: by replacement cost and by actual cash value. Replacement cost refers to the funds needed to rebuild a replica of your home, using similar materials and using current labor costs. Actual cash value, on the other hand, is the replacement cost of a home minus any deductions that can be made on the basis of depreciation. If wear and tear, age or existing damage lower the market value of your home, this will be reflected in the home’s actual cash value.
Home values in Rhode Island are much higher than the norm. While nationally, home values average at $248,857, in Rhode Island homes are valued at $318,115 on average. This can inflate the base cost of your home insurance premiums.
When shopping for home insurance, remember that the sale price of a home is not the same thing as a home’s value. While a sale price can reflect the supply and demand for people desiring homes, home value is not affected by these market pressures, but rather the material costs of the items needed to rebuild and repair a home. Also, while the cost of land is factored into sale price, insurance companies consider it irrelevant to home value.
Local Crime Rates
Basic home insurance coverage in Rhode Island protects from property crime – homes in areas with high property crime rates may therefore experience higher insurance prices, to offset the risk of insuring in these areas. Fortunately, in Rhode Island property crime is less prevalent. According to information from the 2018 FBI Uniform Crime Reporting Program, the property crime rate in Rhode Island after excluding auto theft is 1.52% – below the national average of 1.97%.
Your Income and Education
Some of your personal characteristics may be relevant to the amount you’ll be asked to pay for your insurance. Insurance companies can offer better rates to people who have characteristics that indicate they may be less likely to file an insurance claim – having a good credit rating, for example, is well-regarded. High income rates and a college education are generally associated with good credit – Rhode Island is ahead of the national average in both respects, based on information from the Census Bureau. While the average household income in the United States is $64,179, Rhode Island pulls ahead by hundreds of dollars, with $64,340 on average. Similarly, while 32.06% of people 25 or older in the United States have earned at least a bachelor’s degree, in Rhode Island the percentage is higher – 33.3%.
Where to Purchase Home Insurance in Rhode Island
So you’ve learned some basic information about how Rhode Island insurance is priced and structured, as well as natural hazards to watch out for. What comes next? You can find insurance tailored to your situation best by comparing the prices and policies of many different home insurance companies. Agilerates.com can make this research painless, giving you accurate quotes from a host of insurers in your area. Comparing companies isn’t just a good idea for new homeowners, however. If you already have home insurance, you may find that at renewal time you could get better rates and coverage from a different company. According to the Pulse Whitepaper from iii.org, only 44% of homeowners compare prices of different insurers at renewal time, and only 17% do so online. That means more than half of all homeowners are leaving money on the table at renewal time. Use Agilerates.com online form to get matched with a local agent, get free quotes, and shop around!