Homebuyers not swayed by coverage rates

UNSWAYED: Nicholas Caccia, left, loan officer for First Home Mortgage in Providence, meets with client Christopher Nunez. / PBN PHOTO/ MICHAEL SALERNO
UNSWAYED: Nicholas Caccia, left, loan officer for First Home Mortgage in Providence, meets with client Christopher Nunez. / PBN PHOTO/ MICHAEL SALERNO

Central Falls, Woonsocket and Pawtucket have the most-affordable homeowners’ insurance in Rhode Island, according to a new study. The few hundred dollars’ savings, however, plays only a marginal role in the overall homebuying experience for most people, according to Ocean State lending specialists, Realtors and insurance professionals.

“Yes, most homebuyers are aware that shopping for insurance will differ from community to community, but it does not really hinder them from making a purchase,” said Nicholas Caccia, loan officer at First Home Mortgage in Providence.

“In the end, if you want a house in Tiverton, but the insurance policy costs you $50 more a month, you aren’t going to pass on the house,” he added.

Tiverton has the third-highest average annual homeowner insurance cost at $1,687, according to a recent study done by the New York-based personal-finance-technology company SmartAsset.

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The study examined 10 communities in Rhode Island with populations exceeding 5,000 and averaged homebuying expenses in a five-year period. Central Falls has the least-expensive average annual homeowner’s insurance at $1,165, while Westerly has the most expensive at $1,788. Providence ranks No. 4 with average costs totaling $1,351.

Homeowner insurance in Rhode Island is among the most expensive in the nation, according to the study. Even Rhode Island’s least-expensive city, Central Falls, is $164 more than the national average of $1,001. The least-expensive policies in the nation on average are in Shenandoah, Pa., where annual costs are $138, according to the study.

But homeowners’ insurance consideration usually takes a backseat in the minds of most homebuyers, as concerns regarding interest rates and taxes on the homes usually jump to the forefront, according to Caccia.

“Owner’s insurance is usually an afterthought for most clients, but I feel like it is a huge factor when it comes to deciding on one house from another,” Caccia said.

The issue arises when lenders take monthly insurance payments and calculate it against a homebuyer’s debt-to-income ratio. If a provider has high rates it could keep a borrower from qualifying for their purchase, Caccia added.

“Conversely, if you are a savvy shopper or have a good independent agent working on your [behalf], you will be able to get a cheaper policy and possibly bump up your purchase price because of it,” he said.

Kathleen Vaillancourt, broker associate at Providence-based Armory Properties LLC., agrees with Caccia, saying homeowner insurance doesn’t usually make or break a deal. But she advises homebuyers to shop around for insurance and to begin with whichever company provides the buyer auto coverage, as there’s sometimes a better rate in bundled policies.

Indeed, J.D. Power in its 2015 U.S. Household Insurance Study found that those who bundle multiple policies are typically happier with their service compared with policyholders who don’t.

As for the difference in homeowners’ insurance community to community, Vaillancourt says living near a body of water plays a role.

“I know I pay in Tiverton about $1,235 per year and it includes a hurricane deductible to allow for wind damage from [storms],” Vaillancourt said. “Tiverton is largely coastal, but I have my auto [insurance] with the same company, so I get a discount.”

There are a lot of factors that play into a homeowner’s insurance policy, including the age of the home, when the latest renovations happened, plumbing and heating, whether there’s hydrant protection and even a policyholder’s credit rating is taken into consideration, according to David M. Bruen, president of Coventry-based insurance agency Bruen Deldin DiDio Associates Inc.

But proximity to the coast plays a large role in calculating homeowner insurance policies, he adds, which poses a bit of an issue in the Ocean State.

“Rhode Island, believe it or not, to most insurance companies is considered entirely coastal,” Bruen said. “That makes it more difficult when you’re ‘inland’ to get [good] options.”

Homeowner insurance right now may not be a top concern to homebuyers, but in light of the recent harsh winter and severe storms throughout the region, rates are trending upward. Indeed, in Massachusetts, where more snow fell last winter than Rhode Island, home-insurance rates jumped as high as 9 percent, which has drawn sharp criticism from policyholders and consumer-protection agencies. J.D. Power in its study found customer satisfaction with homeowners-insurance companies fell compared with last year.

In Rhode Island, the concern is currently low, but rates can change quickly, as was witnessed when flood-insurance premiums rose sharply after Superstorm Sandy and the floods of 2010, which has had lasting effects in the industry.

“After the [Hurricane] Katrina debacle and since Rhode Island’s historic floods of spring 2010, it’s a concern,” Vaillancourt said. “Insurance companies had big losses and the [Federal Emergency Management Agency] maps were redrawn.” •

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