Insured Value: Landscaping's Impact

Landscaping can increase a home's resale value by 15-20% on average. However, the cost of landscaping is not always covered by homeowners insurance. While some policies may cover landscaping damage caused by fire, lightning, theft, or vandalism, there are often limits to the amount that will be paid out, and certain types of damage, such as that caused by wind, hail, or pests, are typically not covered. Homeowners may need to purchase additional coverage or endorsements to ensure their landscaping is adequately protected.

Landscaping damage covered by insurance

Homeowners insurance generally covers landscaping damage if the loss results from fire, lightning, vandalism, theft, or explosion. This includes damage to your yard, trees, shrubs, and plants. Damage caused by someone else's vehicle is also typically covered, even if the vehicle isn't owned or operated by a resident of the house.

Each insurance policy will list specific covered perils, and there may be limits on the amount of coverage provided. For example, some policies may only cover a certain percentage of the total dwelling limit for damage to landscaping, typically around 5%. There may also be caps on the amount covered for individual items or specific types of damage, such as the removal of fallen trees.

It's important to note that weather-related damage, such as that caused by wind, hail, rain, ice, or snow, is usually not covered by homeowners insurance. Similarly, damage caused by pests, insects, or diseases is generally excluded from coverage. Flooding is another type of damage that requires separate flood insurance.

To ensure you have adequate coverage for your landscaping, it's recommended to review your policy carefully and consider purchasing additional coverage or endorsements if needed. These endorsements can increase the coverage limits and extend protection to landscaping tools and machinery.

Trees, plants and shrubs covered by insurance

Trees, plants and shrubs are typically covered under homeowners insurance. However, the extent of this coverage depends on the cause of the damage and the insurance provider.

Covered Perils

Trees, plants and shrubs are usually covered if they are damaged due to perils such as fire, explosions, lightning, theft, and vehicles (as long as the vehicle is not owned or operated by a resident of the house). Riot or civil commotion may also be included in the covered perils.

Uncovered Perils

On the other hand, issues caused by wind, hail, rain, ice, or snow may not be covered. Additionally, your insurance will not cover damage caused by pests and vermin, and you will need a separate flood insurance policy for flood damage.

Coverage Limits

Most homeowners insurance policies have limits on the coverage provided for landscaping. Typically, policies will cover 5% of the total dwelling limit for damage to trees, shrubs, and plants. There may also be sub-limits for the amount covered for the replacement of each individual shrub or tree. For example, with a $500,000 policy, you can claim up to $25,000 in damage to your landscaping, but only up to $500 per damaged item.

Tree Removal

Homeowners insurance may cover the cost of removing fallen trees, especially if they have damaged an insured structure. However, this coverage is usually limited to a certain amount, such as $500 to $1,000 per tree, depending on the insurer and the policy. If the fallen tree did not damage an insured structure, there is generally no coverage for debris removal, although some companies may pay for the removal if the tree is blocking a driveway or ramp.

Home insurance rates by state

Home insurance rates vary across the United States, with the average annual premium for homeowners insurance being $1,406 per year, or about $117 per month. However, rates differ depending on the state, with some states offering cheaper rates than others. Here is a breakdown of home insurance rates by state:

Hawaii, Vermont, Maine, New Jersey, and Delaware

These states offer the cheapest rates for home insurance on average. This is attributed to various factors, including lower rebuilding costs, state insurance regulations, and a lower risk of natural disasters. For example, Hawaii has the nation's cheapest home insurance, with an average premium of just $382 per year for $250,000 in dwelling coverage.

Oklahoma, Kansas, Nebraska, Texas, and Colorado

These states are among the most expensive for home insurance. A portion of these states is susceptible to tornadoes, damaging wind storms, earthquakes, and hurricanes, making them more costly. For instance, Oklahoma is the most expensive state, with an average annual premium of $3,659 for $250,000 in dwelling coverage.

Alabama

Alabama's geographic location makes it vulnerable to strong storms, tornadoes, and hurricanes. Parts of the state are also prone to flooding, increasing the likelihood of home damage. As a result, Alabama's average homeowners insurance rates are higher than the national average.

Alaska

Alaska experiences a low incidence of natural disasters, which contributes to lower insurance rates. Common causes of home damage in the state include wildfires, harsh winters, and water damage due to frozen and burst pipes. As a result, Alaska residents pay an average of $372 less per year for homeowners insurance than the national average.

Arizona

Arizona experiences flash floods during its monsoon season, which runs from June to September. The state's arid climate also contributes to wildfires. While not mentioned as one of the cheapest or most expensive states, Arizona's rates are likely influenced by these factors.

Arkansas

Arkansas is prone to earthquakes, flooding, tornadoes, and high winds. These risks likely contribute to higher insurance rates in the state.

California

California's unstable insurance home market is a growing concern due to frequent wildfires and earthquakes. As a result, some large insurers have left the state, perceiving it as high risk.

Connecticut

Connecticut's coastal position puts the state at risk for flash flooding and high winds. The state also has a wet climate, increasing the likelihood of water damage.

Florida

Florida's long coastline and narrow shape make it vulnerable to hurricane damage, wind damage, and flooding. It is a tough market for homeowners insurance due to its high risk, and rates are expected to rise further with predictions of an active hurricane season.

Georgia

Georgia is prone to tornadoes and hurricane damage, and parts of the state are vulnerable to flooding. These risks likely contribute to higher insurance rates.

Other States

Other states not mentioned above, such as Idaho, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nevada, New Hampshire, New York, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, and Tennessee, also experience various natural disasters and risks that influence their home insurance rates.

Factors Affecting Rates

Insurance providers consider a multitude of factors when pricing homeowners insurance rates, with location being the most significant. States susceptible to natural disasters, such as wildfires, hurricanes, tornadoes, and earthquakes, tend to have higher premiums. Additionally, insurance companies analyse the chances of a homeowner needing to file a claim and set rates accordingly.

Other factors that can impact premiums include claims history, credit score, and the age of the home. Bundling home insurance with auto insurance or installing storm-resistant features can sometimes help lower rates.

Inflation and home insurance

Inflation is currently having a significant impact on home insurance rates. Inflation has increased the cost of building materials and labour, which has, in turn, increased the cost of repairing homes. This has led to insurance companies raising their premiums to cover these higher costs. In addition, insurance companies have also had to contend with a rise in the number of natural disasters, such as storms, which has resulted in more claims being made.

Home insurance premiums have been increasing at a rate much faster than overall inflation. In 2023, the typical single-family homeowner with a mortgage backed by Freddie Mac was paying $1,522, up from $1,081 in 2018. This increase has been particularly acute in coastal areas such as Florida, which are exposed to risks such as hurricanes and coastal erosion. Insurance rates in Florida have risen by more than 40% over the past five years.

The impact of these rising insurance costs is twofold. Firstly, it is causing financial strain for homeowners, with some people being forced to move out of their homes or communities. Secondly, it is contributing to the nation's economic instability, with consumers feeling the effects of high price levels and depressed economic confidence.

To combat these rising costs, insurance companies are advising customers to shop around for the best rates and to take advantage of any discounts or payment options that may be available. However, with insurance companies holding a lot of pricing power, it is becoming increasingly difficult for consumers to find affordable coverage.

The impact of inflation on home insurance is a complex issue that is affecting consumers and the economy as a whole. With the cost of repairs and natural disasters continuing to rise, it is likely that insurance rates will continue to climb, even as overall inflation cools.

Home insurance endorsements

• Guaranteed replacement cost coverage: This endorsement extends your coverage limits and your insurer will pay the full cost for your home to be rebuilt and restored to its condition before the damage, regardless of your policy limits.
• Extended replacement cost coverage: This endorsement extends your dwelling coverage limit by an additional 10% to 50%.
• Personal property replacement cost coverage: This endorsement pays to replace your belongings with new items of similar type and quality without deducting for depreciation.
• Inflation guard coverage: This endorsement automatically increases your policy's dwelling coverage limit to reflect the current construction and labour costs in your area.
• Ordinance or law coverage: This endorsement covers the extra cost of getting your home up to code after a covered loss, including home construction, demolition, remodelling, and renovations.
• Flood insurance endorsement: This endorsement covers your home and belongings against water damage caused by flooding, including high tides, hurricane storm surges, heavy rain, and other sources of natural flooding.
• Water backup coverage: This endorsement protects your home and property from water damage caused by backed-up drains, sewage systems, and sump pumps.
• Equipment breakdown coverage: This endorsement covers the repair or replacement of appliances and devices in your home that break down due to mechanical or electrical failure.
• Service line coverage: This endorsement covers repairs to service lines such as phone and power lines, sewer, gas, and water pipes.
• Scheduled personal property coverage: This endorsement raises your payout limits for expensive property and also covers misplaced items.
• Identity theft coverage: This endorsement covers the costs associated with identity theft recovery, including fraud services, ID replacement, identity restoration, loss of income, and attorney and administrative fees.
• Home business coverage: This endorsement extends financial protection to your business property and raises your coverage limits.
• Dwelling under construction coverage: This endorsement covers theft and damage to building materials while your home is under construction.
• Sinkhole coverage: This endorsement covers repairs to your home and foundation if it is damaged by a sinkhole.
• Windstorm coverage: This endorsement covers wind and hail damage, which may be excluded from your policy if you live in an area at high risk for hurricanes or windstorms.
• Earthquake coverage: This endorsement covers the costs of rebuilding your home, replacing your belongings, and paying for additional living expenses if your home is destroyed by an earthquake.
• Loss assessment coverage: This endorsement covers your portion of the damage to common areas in a shared community, such as a condominium building or a neighbourhood with a homeowners association (HOA).

Frequently asked questions