Ohio doesn't experience many hurricanes, devastating ice storm or floods, which are big reasons why homeowners insurance costs ranks as the fifth lowest in the United States (tied with Delaware). Because there are so few catastrophic events, homes don't suffer the same amount of damage that occur in states like Texas, Florida and Louisiana, which have the highest homeowner insurance rates in the country. Geez, nothing much ever seems to happen in Ohio and Delaware.
By the Numbers
The average annual homeowner insurance rates in Ohio are $530. Compare that with Texas, where the average rates are $1,409 a year. Texas leads the nation in the price of homeowners insurance. Note that these figures are based on the latest numbers available from the Insurance Information Institute, which date to 2006.
Insurance rates are based on statistics that indicate a history of disasters. They are also based on the claims that homeowners make to their insurance companies to compensate for the damage to the home and belongings and other ancillary items, depending on what the homeowners insurance policy covers. So if you live in Tornado Alley, an actuary will look at the likelihood of a destructive event occurring in your neighborhood and weigh that against the value of the damage it could cause. That's why a state like Oklahoma ranks sixth in homeowners insurance costs. Twisters have a way of finding a path to homes there causing a lot of destruction.
Average Cost is Misleading
The median is a more fair way to evaluate home insurance prices. The average lumps the costs of all houses--mansions to shacks--in a pile and divides the insurance costs by the number of houses in the sample. It doesn't consider the difference in the potential losses of the homes themselves. A better way to evaluate the cost of homeowners insurance is by looking at the median. The median number balances out the high costs of mansions from lower-priced homes. In other words, if you take a large number of high-priced homes and average them with the cost of a few low-priced ones, it skews the average value to the high end.
Put simply, the median is the point at which half the homeowner values are valued higher and half the homeowner values are lower. It's a more accurate way of judging what you will pay for homeowners insurance. On which half of the median your property lies, is a better indication than using an average figure.
The Bottom Line
The underlying reason Ohio ranks so low for homeowners insurance rates is that it has historically had infrequent claims or claims in large amounts. When it comes to insurance, it's a matter of crunching numbers. The rates in Cleveland are higher than Chagrin Falls. It's not all due to the weather; there are other factors involved in homeowners insurance like theft rates and other socioeconomic considerations that are included in determining a rate. If you live in a high-crime neighborhood, expect to pay a little more. But on average, it's still the fifth lowest state for homeowners insurance.
- Photo Credit Chagrin Falls, Ohio; credit, http://www.epodunk.com/cgi-bin/genInfo.php?locIndex=16492
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