Why are Oklahoma home insurance rates so high?

I get this question a lot. That’s because Oklahoma home insurance is expensive. Compared to the rest of the country, Oklahoma’s home insurance rates are usually among the highest. The severe weather risk is the major reason for that. Very few states compare to Oklahoma when it comes to wind and hail storms.

What can a person do to reduce the cost of their Oklahoma home insurance as much as possible?

You can’t change the weather over your house.  But, you may be surprised to learn that you have a lot more control over the cost than you think. Understanding what factors matter when it comes to insurance rating is the first step.

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Here are the top 5 factors that impact your home insurance cost in Oklahoma.

 1. Insurance Credit Score

Regardless of your opinion on whether this is fair, there is a statistical correlation between your credit score and how likely you are to file a claim. There are always exceptions to a rule. But in general, people with higher credit scores file fewer claims.

Keep in mind that insurance companies do not use hard credit inquiries (the type that can have an impact on the numerical score). Since insurance is not a loan a hard credit inquiry isn’t necessary. Instead, they use a soft inquiry.

Favorable credit factors may include:
  • Established credit history (length and variety are taken into account)
  • No late payments or past-due accounts
  • Open accounts in good standing
Unfavorable credit factors may include:
  • Late payments
  • Accounts in collection, bankruptcies, foreclosures, or liens
  • Limited credit history
  • Numerous hard credit inquiries

90% of all insurance companies use credit as a factor in determining your Oklahoma home insurance rates. Those that don’t use it as a factor usually sell policies to higher-risk properties.

Since credit information is a factor in so many things, including insurance, it’s very important to review your credit report on a regular basis. You can request a free credit report annually from credit reporting agencies. The Federal Trade Commission has excellent information on how to do this.

2. Age of your Roof

This is one of the biggest ironies of home insurance in Oklahoma. If you have a new roof (say 7 years old or newer), your home insurance premium may be less expensive than if it’s older. Some companies will not offer replacement coverage on older roofs.

Insurance companies know the older your roof gets the more likely it is you will have a claim on that roof when the next storm comes through. Almost no one replaces their roof unless they file a claim. Here is the irony. The new roof that is the result of filing a claim may lead to a lower home insurance cost.

A storm-related loss is the most likely claim you will file in Oklahoma. Over half of all home insurance claims are weather-related, according to the Insurance Information Institute. It should come as no surprise that the risk of severe weather will always be a major factor in home insurance premiums in Oklahoma.

3. Discounts

Multi-line, bundling, or whatever you want to call it, insurance companies really want to help with every line of insurance they can offer. The reason is, the more policies you have with a company, the longer you are likely to stay with that company.

It’s usually a beneficial situation for the client as well as the company. The familiarity the client has with the company will hopefully result in the trust and peace of mind that insurance should provide.

If you want to lower your Oklahoma home insurance cost, find out all the discounts a company offers and utilize them to your advantage. Many people still have their cars, home, boat, and life insurance with different companies. This is rarely the most efficient insurance plan.

Acquiring new clients is an expensive process for insurance companies. So, the longer they can retain a client, the more profitable the company will be.

4. Deductible

If you are willing to take on the risk of smaller losses by having a higher deductible, the insurance company will dramatically reduce your premium costs. In a state like Oklahoma, the risk of damage from wind and hail is high.

So, if you are willing to take on a higher deductible for this risk, your rates will be much lower.

If you plan for financial emergencies by building a savings account or at least have access to a credit card, you can carry a higher deductible. An insurance claim on your home can be an emergency. Home insurance claims don’t happen very often, so the ability to prepare an emergency fund is an important part of any insurance plan. (Read our blog The best insurance deductible in Oklahoma.)

5. Coverage

Your coverage is VERY important. But, it has less impact on the final cost of your insurance than any of the first four items on this list.

Surprised? Most people are.

How much coverage you have on your house is less important than HOW your house is covered. You can have two home insurance policies that appear to have the same amounts of coverage. But a closer look at the application of these coverages may reveal that they are not the same when there is a claim.

This is why people get frustrated with insurance in general. Once you start getting into the nitty-gritty the details of “replacement cost coverage” and “actual cash value” start making you feel like it’s all one big scam.

Let me be as clear as I can on this. Talk with your insurance agent and decide HOW you want your home and belongings to be insured if there is a loss. If you want everything to be insured at “replacement value” it’s going to cost more than if you have “actual (depreciated) value”.

This small detail can add an additional 25% to the cost of your home insurance. But I would argue it’s worth it. I haven’t even gotten into other details like the limited coverage that all home insurance puts on things like jewelry and guns, usually a cap of $1,000 to $5,000.

These details sometimes only become important after a claim is filed and the insured finds out their less expensive policy led them to a more expensive claim.

Lower your Oklahoma home insurance cost.

  • Take advantage of the methods available to reduce your home insurance premium.
  • Work to improve and maintain a good credit rating.
  • Maintain a newer roof.
  • Take advantage of discounts for bundling multiple lines of business with your insurance company.
  • Make sure you have the highest deductible practical for you based on your financial emergency plan.
  • Review your coverage regularly with your agent to make sure your insurance plan is accurate through every phase of your life.

Buying home insurance in Oklahoma is not a casual event. A home insurance contract is a very serious thing. Protecting your most valuable asset requires some thoughtful consideration of what risk you are willing to take in the form of an insurance deductible. Then, consider how you want your insurance company to pay for damage to the house and your belonging in the event of a loss.

Shopping for insurance usually starts from dissatisfaction with the price you are paying. Therefore, price is a big factor when you start comparing insurance quotes. Most people are savvy enough to know there must be differences but don’t know where to look for them. The agent you are working with should be able to point the differences out in an unbiased manner.

These five things I’ve discussed are the biggest factors in the price you will pay for your home insurance in Oklahoma. When you have a claim the only thing that will matter is the last one, COVERAGE.

If you would like a professional review of your insurance plan, we would welcome the opportunity to help you evaluate your risk and come up with an efficient plan to protect your assets and income.

Of course, we would like to work for you too. But you will have all the information to truly compare insurance policies and companies to determine where you will be best served.

Call us at 405-340-0606, or complete this short contact form and we’ll reach out to you and get the conversation started.

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Are you ready to save time, aggravation, and money? The team at Allen Drew Insurance Agency is here and ready to make the process as painless as possible. We look forward to meeting you!

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