A home is a shelter – a place meant to protect you from the elements and the dangers you can face outside. But what protects your home? This is where home insurance comes in. It’s one of the most important, though expensive, purchases you can make. Costs and coverage can change depending on the state you live in. In Alaska, homeowners insurance is less expensive than most of the country, although standard insurance packages don’t cover earthquake damage in the most seismically active state in the country – meaning supplemental insurance is often needed. The key to finding great home insurance in Alaska lies in comparing the rates of many companies as well as finding comprehensive coverage for your needs. The more informed you are, the easier the search will be. But what kind of rates or coverage can you expect in Alaska? Well, you’re about to find out!
- Fun fact: in 1964 Alaska was hit with the second largest earthquake ever recorded, with a 9.2 magnitude.
Average Rates in Alaska
Alaska is on the cheaper side when it comes to homeowners’ insurance premiums. In fact, according to the most recent data its premiums are cheaper than 74% of the nation, with a $959 price tag. That’s $252 below the national average, with premium prices most closely matching those of Michigan ($942) and West Virginia ($940).
Renters’ insurance offers comparatively fewer savings, with a middling price of $166 that’s $14 less than the national average of $180. States with renters’ premiums that are comparable to Alaska include New Jersey, with $165 premiums, and Illinois, with $167 premiums.
Alaska Legal Insurance Requirements
You aren’t legally required to have home insurance in Alaska. That said, if you have a mortgage, your lender will most likely require home insurance based on the assessed value of your home. Of course, the value of a home can be in flux – if you make improvements upon your property, renovations, or additions, you may alter the value of your home or be entitled to insurance discounts. Insurance discounts can be particularly helpful, since your policy may automatically increase by a fixed percentage at renewal time. Even if you don’t find more competitive offers from a different insurance company, it’s a good idea to tell your insurance company if there have been any major changes to your home over the past year.
Most homeowners policies in Alaska offer “dwelling coverage,” which will pay for replacement or repair of your home should it be damaged. The reason your home was damaged is relevant here: any “peril,” or damaging event that’s not excluded by your policy may be covered. Perils that are usually covered include fire, lightning, windstorm, hail, explosion, riot or civil commotion, aircraft, vehicles, smoke, vandalism and malicious mischief, theft, and falling objects.
In addition to dwelling coverage, Alaskan homeowners insurance can provide the following:
- Personal Property Coverage: This will protect the furniture of your home, as well as your personal effects, from damage caused by a list of perils named by your insurer. Usually this coverage amounts to 50% of your dwelling coverage, but there may be limits to coverage depending on the type of peril. For example, your insurer may offer more coverage for fire damage than for theft.
- Additional living expenses. If you need to leave your home for a time while it’s being repaired, this will help pay for living expenses like hotel stays. Usually, the coverage amounts to 20% of your dwelling coverage.
- Personal liability. If someone is injured or their property is damaged and you’re held responsible, this coverage will help protect you from claims and lawsuits. It applies even if you or your family are held responsible for damaging another person’s property. Most policies in Alaska have at least $100,000 worth of coverage.
- Medical payments. This will help pay for medical bills if someone is injured on your property, whether or not you’re held liable. This coverage only applies to those who don’t live within the home. Most companies in Alaska offer at least $1,000 worth of coverage.
Common Risk Factors in Alaska
If you live in Southern Alaska, there’s a much higher risk of your home being damaged by Alaska’s frequent earthquakes. Alaska is located right on top of where the Pacific plate meets the North American plate – the movement of these plates against each other creates daily seismic activity. In fact, Alaska has the most earthquakes in the United States as well as having 11% of all the world’s recorded earthquakes, according to the Alaska Seismic Hazards Safety Commission. The state has an average of 1,000 earthquakes every month. Not only that, but every year Alaska can expect one magnitude 7 or 8 earthquake, and six magnitude 6 to 7 earthquakes.
Even though many buildings in Alaska are designed to withstand a certain amount of seismic activity, in 2020 Alaska still is expected to experience the second highest amount of financial loss from earthquake-caused infrastructure damage.
Considering all this, obtaining insurance for earthquake damage is vital. In Alaska, coverage for earthquake damage is considered an optional extra, for which you will pay a separate deductible (usually around 10% of your dwelling coverage amount). It is not standard coverage, and some companies require that homes meet criteria like having secured water heaters before they will allow you to purchase the insurance. Different companies may also define earthquakes differently, and insure for aftershocks different lengths of time after the initial event.
Insurance Demographics/Statistics in Alaska
Insurance companies use formulas to set their insurance premiums. In addition to the value of a home, insurers adjust their premium prices based on the risk that a home will be damaged, or that someone will make an insurance claim. As such, it can be important to understand things like local crime rates, or your annual income when you’re thinking about getting home insurance. Consider the following:
Your Home’s Value
When insuring your home, you can either insure for replacement cost or actual cash value. Replacement cost is how much it would take to rebuild your home using similar materials – most insurers require insuring 80% of your home’s replacement cost. Insuring for actual cash value means you’re insuring for the money it would take to repair your home from normal wear and tear. For both of these insurance types, looking at your home’s market value can give you a general idea of what your premiums may look like. The more expensive the home, the more expensive the premiums!
In Alaska, the median home value is $300,073, which is a bit higher than the national median home value of $248,857. This may increase the price of dwelling coverage.
Local Crime Rates
Theft and vandalism are considered basic perils that most all home insurance will help protect against. But depending on your area, your home may be at higher risk of suffering damage from these perils, with insurers deciding premium prices accordingly. The FBI’s Uniform Crime Reporting Program’s 2018 data, the average property crime rate in Alaska (not including car theft) was 1.67%, slightly lower than the 1.97% crime rate nationally
Your Income and Education
Insurers use crime rates to determine how likely someone is to make an insurance claim. They look at income and education levels for a similar reason: certain demographics are considered “higher risk” for filing insurance claims. As with car insurance, things like good credit and a college degree can lower the cost of the insurance premiums you pay.
In 2018, the Census Bureau found the median household income in Alaska was $74,346, more than 10K over the national average of $63,179. Having a higher income can make it easier for you to pay for your premiums, so it’s good to keep that in mind when shopping for policies. But, the education attainment level in Alaska falls below the national average of 32.06% of people aged 25 and up having earned a Bachelor’s degree. According to the most recent data, 29.2% of people in Alaska reached this level of education.
Where To Purchase Home Insurance in Alaska
Now that you understand some of the home insurance trends in Alaska, you can begin searching for the right plan for you. Agilerates.com can help, giving you accurate quotes for quality insurers. Every year homeowners insurance renews, and with renewal comes the chance to find more competitive prices for better home insurance coverage. 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. Keep that money in your pocket and use agilerates.com online form to get matched with a local agent, get free quotes, and shop around!