Life in Alaska is different than most other places in the United States. Although there is no income tax or sales tax, living in "The Last Frontier" can often be expensive. The median value of a primary residence is about 20 percent higher than the national median value. Homeowners insurance is also more expensive than in most other states. If you still don't know
how much Alaska homeowners insurance coverage you should buy, don't be surprised if it's more than what you used to pay.
The good news is that Alaska isn't necessarily the most expensive state in the nation. It actually doesn't have an income tax or sales tax, and Alaskans do generally receive money from the government, thanks to revenue from oil sales. Alaskans typically make much more -- the median household income is about $15,000 in Alaska than the national median. Also, it's not the most expensive when it comes to homeowners insurance either -- states such as Texas, Louisiana and Florida often rank higher.
Before you buy your new home in Alaska, find out how much your annual premium would be to cover the house. Also, you should have enough coverage to pay for 100 percent of the value of the house if it is ruined. If your house is appraised at $80,000, you should have coverage for at least $80,000. If your house is appraised at $1 million, you should have coverage for at least $1 million.
Also, be familiar with the three main types of homeowners insurance coverage. The most basic policy is often referred to as HO-1, which offers protections against fires, lightning, damage from riots, windstorm or hail, explosions, vandalism, theft, glass breaking, smoke and personal liability, and volcano eruptions. (Alaska has more volcanoes than any other state in the nation.) It usually doesn't include damage from floods or earthquakes.
HO-2 coverage is a middle-of-the-road type of coverage, and it's used only by a minority of homeowners. It typically includes damage from falling objects, water damage that appliances may have caused, or damage caused by weight of snow or sleet, as well as coverage that you would normally have under an HO-2 policy.
Many people opt for HO-3 coverage, the most comprehensive between HO-1, HO-2 and HO-3. It even usually covers damage from flooding or earthquakes.
As you consider how much Alaska homeowners insurance coverage you should buy, remember that the cost of homeowners insurance can vary based on where you live in Alaska. The cost can vary widely between Anchorage -- Alaska's biggest city -- or one of the many rural areas of Alaska.
