Notable for its diverse geography, Arkansas is home to over 3 million people. Arkansas has its share of natural disasters and the need for homeowners to find coverage can be made difficult by the varying risks. There are 14 major lakes across the state each with different characteristics but all sharing the common risk of flooding. This directly relates to a large amount of claims leading to millions of dollars in payouts by homeowners insurance companies.
The state experiences some of the most severe weather in the country with an annual average of 39 tornadoes. Annual precipitation throughout the state averages between 40 and 60 inches with an annual average of over 60 days of thunderstorms. Not only does a typical year in the state of Arkansas have thunderstorms, tornadoes, and hail, but winter weather has a significant impact on the state. The claims that accompany this weather, such as frozen pipes, lead to many preventable claims. Homeowners are urged to winterize their homes in many parts of the state.
Much of Arkansas is rural with long distances from homes to fire stations posing a potential high risk for these particular homeowners. Despite good credit or loss history, this factor alone makes many insurance companies deem large areas as ineligible for coverage. On the other end of the spectrum the some of the heavily populated areas in Arkansas have a potential risk of burglary and vandalism claims for homeowners.
As a state without a FAIR Plan, Arkansas consumers are lucky to have a thriving and competitive homeowners insurance market, despite the high risks posed by a variety of hazards. Over time the insurance market will continue to respond to the events that cause insurance claims and mitigating potential for loss will continue to become more important for underwriting purposes and to keep rates under control.