By: Ramu Garuda July.15, 2019
Residents of New Jersey incur an average homeowners insurance premium of $1,149, which is slightly lower than the national average of $1,228. According to the Insurance Information Institute (III), 32% of property owners in New Jersey live near the coast. This makes them more vulnerable to hurricanes, which translates to a higher rate of insurance claims payout.
Another factor affecting homeowners insurance premiums is geographical disparities depending on property location. A homeowner residing at Garden Estate pays a homeowners insurance premium of $1,092, which is lower than the national average of homeowners insurance premium.
State Farm is the largest homeowners insurance provider in New Jersey. In 2017, State Farm wrote about $290 million in direct premiums to homeowners in New Jersey. State Farm provides homeowners insurance at an average premium of $804.
According to the laws in New Jersey, for a homeowner to avail a hurricane insurance claim, they must incur a hurricane deductible that is based on two criteria: the National Weather Service must designate the storm as a hurricane and wind speed should reach 74 mph in an area within the state. Further, damages to property are estimated between the 12 hours prior to the first recorded instance of 74 mph wind speed and 12 hours after the last recorded wind speed of 74 mph.
In 2012, New Jersey suffered the wrath of Hurricane Sandy, during which the average flood insurance claim reached $60,000 according to III data.
There are two types of insurance deductibles. First is the traditional fixed dollar deductible, where if the deductible is $500, the homeowner must pay $500 to cover repair costs before the insurance coverage is made available.
The second type is called percentage deductible and has become increasingly common in recent years. Here, homeowners incur a significantly higher amount before paying the insurance premium. The hurricane deductible for homeowners insurance is 5% of the property value in New Jersey.
In recent years, a second type of deductible has emerged and also gained much popularity, especially for hurricane coverage. Known as a percentage deductible, it requires homeowners to pay a much larger out-of-pocket amount before the insurance coverage kicks in.
The City of Camden reports the highest average homeowners insurance premium of $1,751, followed by East Orange with $ 1730, Newark with $1650, and Passaic with $1645. At $485, Basking Ridge has the lowest homeowners insurance premium in the state.
According to the New Jersey Department of Banking and Insurance, when major insurance companies refuse to write certain risks, for example, in the case of extremely high-valued or unoccupied property or homes situated near a beach, then homeowners can consult non-admitted insurance companies or eligible surplus lines insurers for risk coverage. This practice is allowed under New Jersey laws.
Homeowners in New Jersey can avail discounts on their homeowners insurance premiums by choosing a higher deductible value, making them a lower risk for insurance firms.
Homeowners also have the option of availing discounts on their homeowners insurance premiums by bundling their home and auto insurance, thus reducing the average homeowners insurance premium by about 15%.
They can also avail an additional discount of 5% by installing safety features such as smoke detectors, burglar alarms, and deadbolt locks. Installing sprinkler systems and fire or burglar alarms can further increase the discount by 15-20%. Customers also receive a 5% loyalty discount if they have been with the firm for 3-5 years and a 10% loyalty discount if they have been with the firm for 6 years or more.
Through this process, homeowners in New Jersey can save up to $517.2 in homeowners insurance premiums.
Ramu is a research analyst with over 9 years of analytics & research experience. Prior to joining the company, he worked with some of the prominent consulting and market research firms in India, including Pride Technology (Supporting consulting projects to PWC), RR Donnelly, and The Hackett Group. His skills include company profiling, benchmarking, data and trend analysis, industry analysis, and report writing across the industries. Ramu holds a Master’s degree in Finance and Marketing. He also has a bachelor’s degree in Biotechnology.