Home insurance companies will determine your rates based on a wide range of factors. Generally, these factors are kept as trade secrets. Nobody really knows exactly how they evaluate your risk and calculate your premiums. But you will notice that urban, suburban and rural homes tend to vary dramatically when it comes to the premiums paid by the owners of each.
However, your insurer does not simply mark RURAL on your policy with a big red rubber stamp. That is to say that your risk is not evaluated differently because your home is rural. Rather, the fact that your home is rural is most likely incidental to all the reasons that your insurance rates differ from those paid by someone living in a similar home in a gated community.
Here are some of the factors that make up the difference between your typical urban, suburban and rural homes:
- Proximity to fire departments. Rural homes tend to be far away from public facilities, such as fire departments. This means that you are at a higher risk for fires.
- Crime rates. Urban homes are at a higher risk of crime than suburban and rural homes.
- The value of the home itself. Suburban homes tend to be the most expensive, given their high-value locations and proximity to public and private schools and places of employment.
- Wood burning stoves. These can come in handy during long winter months. But they can also bump your insurance premiums. Wood burning stoves are most common in rural homes.
- Building quality, age and materials. Suburban homes will almost invariably be built according to more recent codes and standards.
Every neighborhood has its own unique risks. You may be very close to a fire department in the city, but you also have higher instances of theft and vandalism. A suburban neighborhood may be safer, but the homes will also be more expensive. Rather than just considering whether your home is rural, urban, or suburban, your insurer is going to take all these risks into consideration when quoting your rates.