UPDATED: Mar 13, 2020
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Homeowners Insurance Premiums in Alaska
Purchasing your own home is one thing – but purchasing one in the wild tundra of Alaska is another entity all its own. You’re going to need home insurance, even if you don’t have a mortgage on your property. This untamed frontier has too many potential perils for you to risk not having your property insured.
The industry standard, and the most popular policy available from most homeowners insurance companies, is called an HO-3 special form policy. Keep in mind, though, that some companies will undoubtedly deviate from the norm and possibly craft their own unique policies. And it will be up to you to understand what your policy covers, what perils you can and cannot file claims for, your coverage limits, and your deductible(s).
|Type of Coverage||Coverage Amount|
|Replacement Cost (Dwelling)||$200,000|
|Replacement Cost (Contents)||$100,000|
Average homeowners insurance rates are pretty uniform in Alaska. This has a lot to do with the fact that most homeowners will have to worry about the same perils – such as wildfires, moose violence, winter storms, structural damage from polar bear attacks, earthquakes, and more – regardless of where their home is located. The biggest factors that will influence your annual premium have a lot more to do with the value of your home and property than your geographical location.
Just because the chart above makes it seem like there is little variety in Alaskan home insurance premiums doesn’t mean you shouldn’t try and get multiple quotes from different companies. Depending on how they evaluate your credit, it shouldn’t damage your FICO score (but we’ll talk more on that later). And the less of an effect it has on your credit rating, the more quotes you can collect for a fair and thorough evaluation.
Laws and Requirements
Technically, there is no law that says you absolutely have to purchase a home insurance policy. But since most banks think they are above the law, your mortgage lender will most likely make it a mandatory part of your home loan. It makes sense, if you think about it; technically, your home still belongs to the bank until you finish paying it off. And they, just like you will whenever you do finally own your property outright, have a vested interest in protecting that asset from harm or total loss destruction.
Taking a Home Inventory
Have you taken a home inventory yet? Because that’s something you’ll have to do before you even start approaching insurance providers and requesting quotes. If you do it backwards, it can have a serious effect on your final premium. Whether you underestimate or overestimate your personal property’s value, it’ll end up costing you in the end – either by leaving you with insufficient coverage to cover a claim, or by wasting thousands of dollars in premium payments for purchasing too much coverage.
Choosing What (and How Much) Coverage
The most obvious perils that Alaska residents have to worry about are hurricane-related. But those aren’t the only disasters that can befall your home and/or property:
- Fires – Whether you believe in science or not, the fact is that climate change has made the risk of and damage from wildfires much more prevalent in recent years. And it’s only going to get worse from here on out. Luckily, insurance companies in Alaska still provide coverage for both your domicile and the personal property within when it comes to fire damage. But you may want to stop by the Alaska Division of Insurance’s page on fire safety tips for the home.
- Floods – Water damage is an expensive thing to fix, which is why most insurance companies don’t sell flood insurance. Some of them do, but the majority of flood policies are administered by FEMA through the National Flood Insurance program. These policies are relatively affordable, and can protect your home against any water-related perils that your private policy won’t.
- Earthquakes – Believe it or not, Alaskans have more to worry about than Californians when it comes to earthquakes. Alaska sits at the northern tip of the “Ring of Fire”, a geologically active part of the Pacific Ocean that stretches for thousands of miles. It’s not uncommon for the state to experience 1,000+ earthquakes in any given year. But because earthquake damage is so common (and therefore expensive), most insurers enforce an earthquake deductible equal to 10-20% of your structure’s covered value. So if your home sustains earthquake damage, you will have to pay that deductible first before your provider will make good on your claim.
- Covering Your Property – This is the part of your insurance policy, usually designated Part C Coverage, where your home inventory comes in handy. It pays to repair or replace the personal property located within your dwelling, up to the coverage amount specified, which is usually around 50% of your home’s total worth.
- Liability Coverage – Accidents can strike at any time. And even if it happens to your best friend or a close family member, if it happens on your property, you could be held legally liable for the financial damages. In most cases, the liability coverage on your homeowners policy will help you pay for most – if not all – costs you are obligated to pay.
- Umbrella Coverage – Many Alaska residents may have homes valued well beyond the coverage limits most insurance companies are willing to sell. This is where umbrella insurance comes into play. It helps fill the gaps between the coverage you need, and the coverage your insurer is willing to underwrite you for.
Replacement Cost vs. Actual Cash Value
It’s really important to understand what these two terms mean before you settle on a policy. Your provider may give you the option of choosing which type of claim payout you want for each type of coverage on your policy, or they may insist that you have to accept the payout they assign. Many providers will let you change from replacement cost to actual cash value payouts (or vice versa); just keep in mind that while actual cash value will lower your premiums, it won’t pay out as much in the event that you need to file a claim. The opposite is true for replacement cost coverage. You’ll receive more money for any honored claim related to replacement cost property, but your annual premium will be higher as a result.
How Your Credit Score May Influence Your Rate
When asking around for quotes from different companies, be sure to ask them how they evaluate your credit history before you start giving them your personal information. For the purposes of evaluating your risk and determining a premium, most homeowners insurance providers only look at your insurance score, which is a limited, “soft” check on your credit. Others, however, may go for your full FICO score. This could result in a “hard” check on your credit, raising red flags with the credit rating agencies and potentially lowering your score. And the lower your credit score, the less likely you are to get a good deal on your annual premium.
For more information, feel free to click any of the links you see in this article. They all lead to more detailed information about homeowner’s insurance, specifics on purchasing a policy, and how to find the best deal. You should also contact local resources in your state, such as:
Or contact them directly through the following resources:
Robert B. Atwood Building
550 W. 7th Ave., Suite 1560
Anchorage, AK 99501-3597
Main Phone (907) 269-7900 • Fax (907) 269-7910
TDD (907) 465-5437
P.O. Box 110805
Juneau, Alaska 99811-0805
Main Phone (907) 465-2515 • Fax (907) 465-3422
TDD (907) 465-5437