How Neighborhood Affects Home Insurance Rates

The neighborhood your house is located in can affect your home insurance rates. Here are four common factors that can impact your premiums.
Written by Rochelle Miller-Hernandez
Reviewed by Carrie Adkins
When you review your insurance costs, you might wonder why they are higher than your friend’s, who lives across town. As it turns out, there are many factors that affect insurance costs.
People don’t always realize that the neighborhood in which their house is located can affect their
home insurance rates
. Truth-in-lending laws require that banking institutions not only disclose the true costs of
, but also associated expenses like home insurance, taxes, and other related items.
So, here's how your neighborhood affects home insurance rates, with a little help from
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Proximity to a professional fire station

If your neighborhood has a professional fire station, you will get a lower home insurance rate. The closer you are to the fire station — or a fire hydrant — the better your rate will be.
Professional fire stations have a better response time, arriving almost three times faster than a volunteer team. When it comes to a fire, that speed could mean the difference between some minor damage and a
total loss

Crime rates

Unsurprisingly, if crime is common in your neighborhood, you will have higher home insurance costs. (This will probably affect your
car insurance
rates as well.) This is due to a greater chance of damage and vandalism to your home and theft of possessions.
Your insurance carrier partially calculates your rates by your zip code and neighborhood, so they will know the crime rate statistics of the area where your home is located. They must factor in possible repair and replacement costs.

Natural disasters

If your home is in a neighborhood that experiences
natural disasters
, your home insurance rates may be higher. A lot will depend on how often the area is affected by adverse weather.
For example, if your neighborhood experiences
every year, your insurance rates will be higher. However, if your neighborhood was hit by a tornado for the first time in 100 years, your rates may not go up at all. It might have been the result of a rare weather pattern that may never happen again.

Proximity to water

If your neighborhood has a body of water like a lake or a large pond, your home insurance rate may be affected indirectly by your need for
flood insurance
. Standard home insurance does not cover floods. When you add this type of coverage, your insurance costs go up.
You may not think you need it, but about 25% of flood damage claims are from owners who do not live in high-risk areas. A sudden rise in water due to adverse weather can quickly result in unexpected flooding.
The neighborhood your home is located in does affect your home insurance rates. How much and in what way depends on several factors, including the ones covered in this article. The good news is, there are things you can do to help reduce costs like installing fire detectors, an alarm system, security cameras, or other items designed to protect your home.
You can also protect yourself with the right home insurance. To find the best rate, bundle it with your
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