Homeowners Insurance in Arkansas

Homeowners insurance is crucial for Arkansas residents. The state is at high risk for tornadoes, earthquakes, floods, hail and windstorms, and hurricanes. Natural disasters in Arkansas lead to injury, loss of life, and severe damage to homes and other structures. Since 1953, Arkansas has experienced 71 federally declared disasters, and the ratio of disasters per person is 22.98 disasters per 1 million people. Located in the southern mid-west, the state is poised to experience many weather events that lead to abundant insurance claims.

Along with the damage caused by storms and mother nature, Arkansas residents also must deal with water damage from burst pipes and leaky plumbing systems, mold damage, theft, fire, and tree limbs falling. Other claims involve window damage caused by the owner or a family member (e.g., a baseball hitting the window).

Like all other states, Arkansas does not require homeowners insurance, but anyone who owns property should have it. If you buy a home in Askansas, with a mortgage, your lender will require that you purchase home insurance and keep it until the loan is paid off. It protects both you and the lender from catastrophic damage to the property.

As of July 2024, the average cost for homeowners insurance nationwide is $2,601/year. In Arkansas, the average is $5,074/year, much higher than the national average due to the frequent tornadoes, hurricanes, and other wild weather events in the state.

Every state has its own share of perils, and insurers provide certain types of coverage to pay for these disasters. In Arkansas, the most common types of coverage are:

Insurance providers in Arkansas recommend that homeowners also add coverage for floods, which is extra and only offered by some insurance companies.

FEMA (Federal Emergency Management Agency) manages the National Flood Insurance Program (NFIP) through a network of 50 providers across the U.S.

Since most homeowners insurance does not cover floods, this supplemental coverage can repair damage and replace items after a flood. Depending on the options you choose, it can cover the building and/or your personal belongings. This program is available to homeowners, renters, and businesses. Learn more about the program on FEMA's website.

Severe weather is becoming more prevalent as global warming increases and the number of disasters yearly mounts. The more disasters we see, the more claims, and as a result, insurance providers must increase their rates to stay afloat. Many billion-dollar events have added to the problem. The biggest culprits are wildfires, floods, and tornadoes, some of which can be found in Arkansas.

Home insurance rates have increased by 34% over just the past five years. From 2018 to 2023, Arkansas saw an increase in home insurance costs of 32.5%.

Fire is by far the most damaging and costly peril. The average fire claim is $77,340. Wind and hail cause 34% of insurance claims. Arkansas sees many windstorms with hail each year. From 2015 to 2019, Arkansas saw insurance claim losses of $508,401,200. The state has had 94 billion-dollar losses from 1980 until now. In 2023 alone, Arkansas had 23 tornadoes, which can devastate property.

Many things factor into the cost of homeowners insurance. For one, your location. Where you live and how prone that area is to natural disasters is the number one factor affecting the price of your insurance. Other factors affecting the cost are the age of your home, construction materials used to build your home, your deductible, credit score, claims history, and perceived risk.

Since homeowners in Arkansas are subject to tornadoes, hurricanes, windstorms, and hail, fortifying your home with more durable, storm-resistant materials could help you save on your home insurance. You can also save by bundling policies, shopping around to find the best provider, asking for discounts for being a loyal customer, increasing your deductible, or filing claims only when absolutely necessary. If you can fix small things yourself, do so, or your insurance cost may spike if you have too many claims.

Homeowner insurance policies cover things like storm damage, theft, vandalism, and other disasters. They replace or repair your home after a qualifying event. Most policies include personal belongings, liability, medical payments, and ALE coverage. There are two main types of policies: cash value and replacement cost. Cash value factors in inflation and depreciation, so if you had a fire, that policy may not cover the full replacement of your home. It's always best to buy a replacement cost policy.

You can get a home insurance policy in many ways. You can apply online, call the toll-free number, or talk to a local insurance agent. You can even use online calculators to see how much insurance you need. Once you find a provider and choose your coverage, you must pay the first year upfront. After that, your premiums will be paid through your mortgage escrow, or you will pay them once a year on your own.

Especially in Arkansas, home insurance is expensive. Thankfully, there are many ways you can save on home insurance. Some tips to cut the cost of your home insurance are:

• Senior, Military, or Professional Discounts: Many insurance providers offer discounts to senior citizens, military personnel, and other types of professionals.
• Bundle Policies: Bundle your policies for a discount.
• Auto Withdrawal: If you allow your carrier to withdraw your premiums from your bank account automatically, they usually discount them.
• Loyalty and Claims-Free Discounts: You can also ask for a discount when you have been a loyal customer for many years or have no claims.
• Install Security System: Install a security system to lower your risk of theft and vandalism for a discount.
• Upgraded Materials: Upgrade your roof, windows, and siding to withstand storms better, and you can earn a discount on your rates.
• Increased Deductible & Improve Credit: Increase your deductible and improve your credit for even further discounts.

Common Rates Offer by Homeowners Insurance Firms

New construction homes cost less to insure than older homes. New homes earn the highest discounts, sometimes as much as 40%. Insurance.com says insurance rates may double in 2024, making finding discounts imperative.

Home insurance for new construction homes is much cheaper, but other things factor in, like your credit history, the firm you choose, and the size and location of the house. For a new construction home, you can expect to pay about $3,235 annually, 63% less than the state average.

Top 10 insurance firms in Arkansas and the average savings for new homeowners:

Home renovations and upgrades can enhance a home's beauty and make a space more usable, but they can also impact its insurance. Some increase your home insurance rates, and other renovations lower them. Some have no effect at all.

Renovations that Increase Your Rates

Things that can increase your home insurance rates include:

• Swimming Pool: Although a pool can increase the value of your home and make it more appealing to potential buyers, it is considered an "attractive nuisance" to insurance companies, posing additional risk, and can increase your rates.
• Building a Home Office: Working from home can simplify your life and allow you to achieve a better work-life balance. However, the additional space and renovation required to build a home office may increase your home insurance rates. You might also need to add coverage for your office equipment and computers.
• Upgraded Kitchens and Baths: Redoing your bath or kitchen will add enormous value to your home (50% on average), but you must also increase your coverage to restore it to its current state after an event. More coverage means a higher rate.

Renovations that Decrease Your Rates

Things that can lower your home insurance rates are:

• Upgraded Roof: If you upgrade your roof to one that better withstands storms and wind damage, you could reduce your home insurance rates.
• Home Security & Monitoring: Insurance companies are concerned about theft. If you install a full security system with camera monitoring and an alarm, your insurer may give you a discount.
• Water Shut-Off Devices: Installing automatic water shut-off devices can avoid flood and water damage. Your insurance company may offer a significant discount for this upgrade.

Home insurance repairs or replaces your home and belongings after a qualifying event. If you experience damage from something other than a qualifying event, your insurance will not pay for it. If you have plumbing or electrical issues that cause damage, you must pay for them yourself. Upgrades to your furnace, HVAC, electrical, and plumbing are not covered under a typical policy.

Discussing a potential renovation with your local agent before breaking ground is crucial. Find out how it will impact your coverage, how much more you might need after the renovation, and how it will affect your rates.

Renters insurance is for people who rent homes (condos, apartments, and houses). Although it does not contain dwelling coverage (which is covered under the owner's policy), it includes personal property coverage, liability, accidental injury, medical payments, and loss of use, which is like ALE insurance for homeowners. Renters insurance can replace clothing, furniture, shoes, small appliances, and sporting equipment if they are damaged, destroyed, or stolen.

Renters insurance is priced based on your location, coverage, and other factors. The higher the risk, the higher the price. If you choose more coverage, your rates will be higher.

The average renter in Arkansas pays $23/month for insurance, which is slightly higher than the national average of $18/month.

Condo insurance is a type of homeowner insurance for condo owners. However, there are some striking differences. For instance, the dwelling coverage covers nothing outside the interior walls. Condo insurance restores all your interior fixtures, flooring, appliances, etc. However, in the event of a disaster like a fire, the condo association's master policy will pay to have the condo rebuilt and restored back to "original" condition. Most condo owners have made updates, and your condo policy will restore it to its most recent condition, making it crucial to have condo insurance in Arkansas. Additionally, homeowners can have liability insurance that protects them if someone has an accident on their property. With condo insurance, it only protects you if someone has an accident inside your condo.

Renters insurance does not include any dwelling coverage. Condo insurance does, but it only covers "walls-in". Both condo and renters insurance cover personal belongings, but condo insurance also offers "loss assessment" coverage, which covers damage you cause to the condo or any common areas on the property.

Condo insurance is labeled as an HO-6 policy. It covers the inside of your unit, personal property, liability, personal injury, loss of use, and loss assessment coverage. When disaster strikes (fire, theft, storms), your policy will pay to replace things like:

• Wiring and Plumbing
• Interior Walls
• Appliances
• Furniture
• Carpet/Flooring
• Light Fixtures
• Countertops
• Personal Belongings

Mold and pests are not covered. Your policy will have limits and expensive items like jewelry or fur may not be replaced.

The average amount a condo owner in Arkansas pays yearly for insurance is $775/year or $65/month. This is with a $1,000 deductible, $60,000 personal property coverage, and a liability of $300,000.

You can save on condo owners insurance in many ways, like bundling your condo and auto insurance together, paying the entire year in advance, installing a security system, and keeping your credit score high.

In 2023, the insurance market in Arkansas saw more losses than any other state except Hawaii and Kentucky. Insurers in 18 states were unprofitable due to frequent storms, hail, and wildfires. Most of these insurance providers operate in the Midwest or Southeast. To combat the losses, they have had to narrow coverage, increase rates, and drop some clients.

Arkansas experiences many windstorms and hail each year, leading to abundant claims and losses, which exacerbates the problem. The state also experiences wildfires and floods, which cause extensive damage and increased losses.

The insurance market is regulated at the state level, not by any federal agency. The entity in charge of regulation must investigate customer complaints and take action against any agency violating ethical and professional laws. In Arkansas, the agency in charge of regulating insurance agencies is the Department of Insurance, located at 1200 West 3rd Street, Little Rock, AR 72201.