Do I Need High-Risk Homeowners Insurance?
You may need high-risk home insurance if companies think you’re likely to file a claim. This can include homeowners who have bad credit, own certain dog breeds, keep attractive nuisances on their property or leave their homes vacant.
High-risk homeowners insurance is a big deal because it usually costs more, and may offer less coverage, than a standard home insurance policy. Thankfully, there are steps you can take to reduce your risk status and your premiums.
Who needs high-risk home insurance?
Home insurance companies often consider some demographics to have a higher risk of filing a claim than others. They also usually charge these homeowners higher rates to lower their potential losses.
Homeowner types that often pay high-risk home insurance premiums include:
Homeowners with bad credit
Many home insurance companies see a link between having a poor credit rating and a higher chance of filing a claim. Some of the personal factors that can lead to a poor credit rating:
- High balances on credit cards and loans
- Multiple late payments
- Debts sent to collection agencies
- Defaulting on a loan
- Bankruptcy
FICO, the most commonly used credit-scoring model, considers a credit score of 500 or lower as poor. If you currently have a poor score, you may expect to see higher insurance rates.
These states, however, prohibit or restrict the use of credit scores in setting home insurance rates:
- California
- Maryland
- Massachusetts
- Nevada
- Oregon
Homeowners with dogs
Some home insurance companies see certain dog breeds as having a high bite risk, which means people who own them have a higher risk of filing a claim. These breeds include:
- Wolf-dog hybrids
- American Bulldogs
- Cane Corsos
- Chow Chows
- Doberman Pinschers
- Pit Bulls
- Presa Canarios
- Mastiffs
- Rottweilers
- Wolf-dog hybrids
If you own one of these breeds, your home insurance company may exclude your dog from coverage or deny you a policy.
Home insurance providers also pay attention to individual dogs with a bite history. If you own a dog that isn’t on the high-risk list but has a history of injuring someone, you could see the same coverage limitations and exclusions as those who have one of the listed breeds.
Owners of vacant or unoccupied homes
If you own a currently vacant or unoccupied home, you may pay higher home insurance rates. Home insurance companies consider homes that are regularly occupied to be a lesser risk.
For example, if a fire starts in the home and someone can catch it in time, they just saved everyone from dealing with a major claim. If no one is living in the home when a fire starts, the risk factor increases.
While “vacant” and “unoccupied” may sound like the same thing, they have different meanings when it comes to home insurance. A vacant home is one in which no one is currently living, but is furnished and has belongings in it. An unoccupied home is one that no one is living in, is empty of belongings and appliances are turned off. If a house goes at least 30 days without an occupant, it is considered either vacant or unoccupied, depending on its tenant status.
Homeowners with attractive nuisances
An attractive nuisance is “a dangerous condition on a landowner’s property that may particularly attract children onto the land and pose a risk to their safety,” according to the Legal Information Institute. Attractive nuisances include things like trampolines and swimming pools.
Attractive nuisance doctrine works on the premise that something like a pool or trampoline is particularly inviting to very young children, and treats children as invitees instead of trespassers.
This creates a high chance of a personal injury claim in the eyes of home insurance companies, which can result in higher rates, exclusion of the attractive nuisance from coverage or outright denial of coverage.
What is high-risk home insurance?
High-risk home insurance isn’t a policy type. Rather, it’s the result of certain factors that home insurance companies use to calculate quotes for potential policyholders.
High-risk home insurance status can be broken down into two categories: High-risk home and high-risk homeowner. High-risk home factors are tied to the house itself, including:
- The ZIP code
- Age of the home
- Construction materials used
- History of extreme weather
High-risk homeowner factors are based on who owns the home. These include:
- Your insurance claim history
- Your credit score
- Owning certain dog breeds or a dog with a bite history
If you and/or your home suggest to home insurance companies that you have a high chance of filing a claim, they may charge you a higher premium to offset the cost of potential payout.
What are the best high-risk home insurance companies?
Allstate is the best home insurance company for high-risk homeowners looking for discounts. State Farm offers the best rates of home insurers looking for companies with no banned dogs. Farmers offers the best coverage options for owners of unoccupied or vacant homes.
Best for discounts: Allstate
Allstate has the best list of home insurance discounts of the national companies we surveyed. Taking advantage of all the discounts you qualify for is a great way for any high-risk homeowner to reduce their insurance costs.
Allstate has one of the best bundling discounts available. If you bundle your home and auto insurance policies with Allstate, you can save up to 25% on your premiums. Allstate also has home insurance discounts for:
- Good payment history
- Having no recent claims
- Being a new homebuyer, or getting a newly constructed home
- Setting up automatic payment
- Getting fire detection or security systems installed
- Signing on with Allstate at least seven days before your current policy expires
Best for dog owners: State Farm
Among the five national home insurance companies that don’t have a banned dog list, State Farm has the cheapest average rate for most homeowners, at $2,427 a year.
USAA offers the second-cheapest average rate of $2,507 a year, but it only sells home insurance to active-duty and veteran military members as well as their families.
| Company | Average Annual Rate |
|---|---|
| State Farm | $2,427 |
| Chubb | $2,606 |
| Nationwide | $3,055 |
| American Family | $3,072 |
| USAA* | $2,507 |
Best for unoccupied or vacant homes: Farmers
Farmers insurance has the best home insurance policy options for owners of unoccupied or vacant homes. Farmers covers vacant homes up to your covered limit if it is a complete loss under a covered peril.
Farmers also sell 12-month home insurance for vacant homes, most other companies only offer three- or six-month policies. Farmers offers prorated cancellation, too, if you need to sell your home, move back into it or rent it out.
How do I reduce my home insurance risk?
Some of the steps you can take to reduce your high-risk home insurance status are to raise your credit score, reduce attractive nuisances and compare quotes from several companies.
Improve your credit score
Making timely payments on bills and credit cards, using less of your available credit and checking your credit report for errors can go a long way toward repairing your credit rating. By committing to good credit habits like these, you should see your credit score go up.
Restrict attractive nuisances
You may reduce the danger of attractive nuisances on your property if you:
- Keep a locked fence around your pool
- Put a safety net barrier around a trampoline
- Remove slip hazards from around a pool
- Keep pool cleaning chemicals locked away
- Install a security system and/or floodlights around your pool
Compare home insurance providers
If your home insurance company raises your rates due to a high-risk issue, or even cancels your coverage, take the opportunity to compare home insurance quotes from multiple companies.
Home insurance companies weigh risk factors differently, so one company may see you as being less risky in various areas than others. By comparing quotes from several insurers side by side, you stand a better chance of finding the best policy for your situation at the best price.
Methodology
The rates shown in this article are based on non-binding quotes collected from Quadrant Information Services. Your rates may vary. Average rates were compiled from rates in all 50 states.
The following coverages and deductible were used unless otherwise noted:
- $400,000 dwelling coverage
- $40,000 other structures
- $200,000 personal property
- $80,000 loss of use coverage
- $100,000 liability
- $5,000 medical payments
- $1,000 deductible
*USAA is only available to active-duty and veteran military members and their families.