If you have moved into a rural area, you will experience a lot of peace, open land, and serenity. At the same time, you will also be faced with trying to obtain a homeowners insurance policy. This in and of itself can be challenging. Rural homeowners may face challenges when looking for rural homeowners insurance.
A rural homeowners insurance policy operates similarly to a standard homeowners insurance policy. Rural properties can often have more detached structures and more0. personal property to insure compared to a regular home. Additionally, rural houses may be farther away from emergency services and utilities. These factors are all taken into consideration when insuring a rural home.
Keep reading to learn more about the differences a rural homeowners insurance policy has versus a standard home insurance policy and how it may affect you.
- Homeowners insurance for rural homes works in a similar way to standard home insurance policies.
- Rural properties often require higher limits for other structures and personal property coverages than your standard suburban home.
- Rural homes can be more expensive to insure because they are usually located in areas with no fire hydrants and are further away from the fire station.
Rural homeowners coverage
Similar to standard homeowners insurance, rural homeowners insurance covers many different possible aspects of the property and perils it will cover. Below we overview each part to help you understand exactly how it works.
Dwelling coverage
This part of your rural homeowners insurance coverage protects the dwelling structure in which you live. This part of the coverage includes the pipes, electrical, HVAC, roof, and attached structures like a porch and attached garage. If your dwelling structure faces damage from a covered peril, it will be covered under this part of the insurance policy.
Other structures coverage
This part of your rural homeowner’s insurance policy will cover the structures that are not attached to your dwelling structure. For example, sheds, barns, fences, and driveways fall under this portion of your insurance. This part of the insurance typically covers a set percentage of the total dwelling limit. By default, most companies set other structures coverage limits at 10% of the dwelling coverage.
For example, if your home is insured for $300,000 and it covers 10% of the dwelling limit, the maximum benefit a policyholder could receive is $30,000 to cover the damages and repair. If your property has a lot of detached structures such as a detached garage, barn, or workshop, you should increase your other structures coverage limit to be a level sufficient to replace them in case of damage.
Personal property coverage
This part of your rural homeowners insurance coverage will take care of the personal property within and around your home. Items such as clothing, decorations, furniture, and electronics are covered as part of personal property coverage. Most insurers allow you to customize your personal property limits to suit your needs.
Loss of use
If a fire burns down your home and it is a total loss, chances are you will need to find alternative living arrangements. This part of your policy will cover your hotel, gas, and food for your alternate living location while you wait for the home to be replaced or repaired through insurance.
Liability coverage
If an individual gets hurt on your property and you are found liable, the personal liability coverage will cover all medical and legal bills that result from the claim within the covered limit. Medical and legal bills can get expensive. Ensure that you have enough coverage for this portion so that you do not have to pay for any remaining balances out of pocket.
Medical payments coverage
If someone gets hurt on your property, this portion will kick in for the medical bills. This portion of the insurance can also cap out, so it is important to review how much coverage you have and ensure it is sufficient in case the unthinkable occurs.
Differences when insuring a rural home
When you own a rural home, it could be just for the peace and quiet the environment brings. Other people use rural homes to run a business or a farm. This can make it so that insurance gets a little bit tricky, especially because this often means there are more structures outside of the main dwelling that needs to be covered too.
Most insurance plans offer a 10% other structures coverage limit. This limit covers 10% of the total insured amount for the main dwelling. If you have a barn, shed, and other farm structures, this 10% may be too little. If this is the case, you will need to speak with your insurance agency to seek other additional coverage for these structures.
Another thing to note, especially if you own a farm, is that most insurance agencies will cover fences at value. This means they provide you with a check after factoring in depreciation. Some insurance companies will not cover fences that house livestock. Ask your insurance provider about this and see what coverage they offer to ensure you are not left with a large out-of-pocket expense.
Personal property and rural homes
Another thing to consider when it comes to rural homeowners insurance is the fact that your personal property coverage may not be enough. Also, some of your personal property will not be covered.
For example, if you have tractors or other expensive machinery, this could max out your limit in the event of a covered peril. If it is maxed out from just your equipment, there will be no more money to replace other personal belongings like furniture and clothing. It is often recommended in this type of circumstance to look into higher amounts of personal property coverage with your insurance provider.
Additionally, many rural properties are also farms. These farms often house livestock and crops. Although this is personal property, it is often not considered to be eligible under a standard homeowners policy. You will need to call your insurance and add these types of personal property or assets to the plan and determine what amount of coverage would be enough.
Beware of personal property sub-limits
Insurance companies will also have sub-limits for high-value items. These sub-limits are often lower than the cost to replace or repair a piece of heavy machinery or equipment on a farm. Due to this, a policyholder who is unaware of this sub-limit may find themselves with a large out-of-pocket expense to finish repairing or replacing said machinery.
Cost of rural homeowners insurance
Many people automatically assume that rural homeowners insurance is cheaper. The truth is rural homeowners insurance is often more expensive than that of urban or suburban areas. This is because rural homes are farther away from fire safety apparatus such as hydrants and other safety services. This, therefore, increase their risk and their insurance premiums.
The way this is determined is through an ISO rating provided by the insurance company. This rating is also referred to as public protection classes. It determines how far away a home is from a hydrant and safety services. Once this is calculated with a number between 1 to 10, the ISO rating gets factored into the policy. Those with a lower ISO rating will pay less in insurance premiums, while those with a higher rating will pay more.
Other Factors That Increase Cost
When the insurance agency looks at your home, it evaluates the risks associated with the specific parcel and structure. Based on the risk, they will determine your rate for your policy and coverage. Some factors weigh heavily on a policy, such as:
- Age of home and buildings
- Business use of property
- Distance from fire hydrant/station
- Flood zone
- Property features (other structures)
If you have a lot of other structures on your property, you will likely see an increase in your premium. If you live too far away from a fire hydrant, you will be assessed as having a higher risk of loss from a fire, which will also raise your premium.
Some factors, like knob and tube wiring or a really old roof, can completely ruin a chance for a homeowner to even get a home insured. If the risk is too high, the insurance company will likely decline coverage, leaving you with an unprotected investment.
Shop around for the right rural insurance
Rural insurance can be hard to acquire without shopping around. Remember, every insurance company will assess your home differently. Some will provide better coverage at lower rates, and others will do the opposite. Take advantage of an insurance agency to help guide you through the process, and do not settle until you find one that fits your needs.
