- Any crime that occurs in a home that requires an activation of a home insurance payout will affect premiums for the owner of the home making the claim.
- However if the crime, including murder, occurred in the home under previous ownership, it will not affect home insurance rates for the current owner.
In Brentwood, California sat an empty lot, its memories reduced to rubble and lost to the changing tides of Hollywood notoriety. For many, it was the most notorious house in that part of California, the home where alleged killer O.J. Simpson lived with Nicole, now gone forever.
Two years after his infamous trial, Simpson failed to make the mortgage for the last time, and the 6,200 square foot home went into foreclosure. Paying a cool $4 million, the new owners demolished the house and set about constructing their own dream home, void of any dark history.
It’s a common scenario in the U.S. today.
“Generally, over the past 20 years, I’ve seen properties with those types of situations torn down because no one would buy them,” says John Espenschied, Owner of Insurance Brokers Group.
“Murder is a very frightful event,” agrees Tyler Forte, CEO of a Nashville-based real estate brokerage called Felix Homes. “But there is one crucial thing people forget: murders are violent crimes, violent crimes tend to stick out like red flags in certain towns.”
Littleton is one example. The small Colorado community hit global headlines with the April 1999 school shooting when teen shooters Eric Harris and Dylan Klebold took the lives of thirteen of their classmates that morning.
Columbine was a learning experience for parents in more ways than one. There were reparations to be made to the tune of $1.6 million, and the funds came from the shooters’ parents’ homeowners insurance.
So what happens when murder takes place inside the home? Does that affect your homeowners insurance rate, too?
How Does a Home’s Past Play Into Its Insurance Premium?
Voi explains that it’s not so much the house as it is the person who lives there. “In many circumstances, a murder would not affect insurability of a home,” says Voi. “It would almost definitely affect the insurability of a person whom commits the murder. Insuring a murderer would be a bad bet by the insurance company.”
Insurance companies may not know about what occurs on the property, says Melanie Musson, a home insurance expert with USInsuranceAgents.com. “Claims history is one of the factors used in setting your rates.”
“If you’ve made several claims, you can expect your rates to increase,” she continues. “In this case, the increase is not directly as a result of murder, but rather it is a result of an insurance claim. Your rates would have increased regardless of the reason for the claim.”
“If your home has been the scene of a crime, it won’t affect your ability to get homeowners insurance or have an effect on your rate. The issue here is that most states will require you to disclose that fact if you are selling it,” says Alex Hansen, a licensed agent with South Florida’s Squeeze Insurance.
“Having a crime committed on your property won’t raise your insurance rates on its own, but you may see a rise to your premiums at renewal if you do make a claim,” says Megan Shepherd, Insurance Editor for Finder.
The Issue of Haunted Houses
Haunted houses have long been known as stigmatized properties, but as General Manager of Review Home Warranties, Steve Orlowski explains, insurers stick to what they can prove.
“When an insurance company determines your premiums and rates, it can only take into consideration factors that can be objectively measured,” explains Orlowski. “A crumbling foundation, for example, can be measured using modern tools and performing a visual inspection. There are no known scientific instruments a home inspector can use for verifying that a house is haunted.”
There may be a caveat, though. “Depending on the state or county, some insurance companies may classify paranormal activity in a home as a material defect. Material defects are things that put the property at an increased risk of further damage or hazards like a fire.”
Do Murders, or Other Grisly Crimes, Affect Home Insurance Rates?
So is there an impact on home insurance when there is a murder or another crime?
“Typically, a home believed to be haunted or was the scene of a grisly murder will not have a negative impact on your insurance premiums,” agrees Orlowski.
Also in agreement is John Espenschied, an expert with over two decades of personal and commercial insurance and the owner of Missouri-based Insurance Brokers Group. He tells us emphatically, “The answer is no. Underwriting is not concerned about what happened in a home,” he says. “They want to know the condition of the home, especially the roof.”
“Murders can have an impact on home insurance rates, but they may not,” says Musson. “There’s not a flat rate increase following a murder. There is no ‘has there been a murder here’ check box when getting a home policy. In some cases, though, rates could be affected indirectly.”
What Does Home Insurance Cover?
A lesser-known part of home insurance includes biohazard and crime cleanups. This can include expensive and extensive cleaning services that are very necessary after a crime.
“Some home insurance policies even include coverage for death clean-up,” says Shepherd, “which may help with costs associated with body removal and cleaning up bodily fluid.”
Coverage can include these services:
- Cleaning blood from walls and flooring
- Removal and disposal of soiled carpeting
- Removal of decomposing bodies
Biohazard coverage can also include any vandalism or damage to a grave marker, although there are limitations regarding coverage.
Virginia Hamill is a Senior Insurance Analyst at FitSmallBusiness who previously worked within Insureon’s wholesale division. She says it is possible that death cleanup coverage can affect your homeowners insurance policy. “If someone is murdered in your house and you end up filing a claim for the cleanup, your insurer could increase your rates,” she says, but adds that “it doesn’t seem very likely.”
Voi says that heinous crime can affect a home’s insurability when the current occupants remain at the property. “The event, such as a murder, would not necessarily cause the issue with the insurance, but you quite often see damage to a home when something awful occurs,” he explains. “The Haz-Mat cleanup crews usually need to come in and restore the property, and a claim is usually opened to pay for the repair of damages.
Shepherd ends with a note of warning: “Please note these policies won’t apply if you are a Dr. Hannibal Lecter or Dexter type.”
The Impact of Murder on the Neighborhood
When there is a crime in the neighborhood, that can mean an increase in rates for everyone, says Espenschied. “Neighborhood crime and murder may be a bigger factor in determining insurance rates in a zip code.”
Shepherd explains that this is due to crime in the surrounding area. “If you live in an area frequented by burglary and other crimes, expect higher insurance rates due to the higher risk of making a claim,” she says.
“If there was a murder in your home and there are also other serious crimes in your neighborhood, your area may become a “high crime neighborhood,’” says Musson. “The lack of safety in your neighborhood will impact home insurance rates. In that case, your homeowner insurance rates will increase because of the higher risk of crime-related claims.”
Forte has seen it happen before in the Nashville area, where his real estate brokerage is based. “Many insurance companies may determine that the sudden spike in violent crimes in the area warrant a higher premium, even if it was one murder committed on someone else’s property.”
How Can You Lower Premiums if Your House Has One of These Issues?
Unfortunately, crime is a normal part of life today. If insurance companies were to penalize every property where a violent crime took place, home insurance would be largely unaffordable for a major part of the population. If you do find yourself haunted by steep insurance premiums, there are some things you can do to help lower your rates.
“One thing about grisly crimes like murder is that home insurance rates are determined by more current crimes,” says Forte. “If the event happened decades ago, it should have a minimal effect on your home insurance rates.”
For more recent events, he recommends that you shop around for the cheapest homeowners insurance and improve your credit score. “These tend to have more of an effect on your home insurance than a dark history anyway,” he says.
Shepherd recommends the implementation of new home security for benefits that twofold: safety and savings. “You can get home insurance discounts by improving your home’s security,” she suggests. “Invest in and check smoke and CO detectors. It also benefits you to have a burglar alarm and install secure lock windows to make your home as safe as possible.”
If you are embarking on the process of homebuying, Musson says that a previous crime could have an effect on a home’s value. “If you’re looking to buy a house, you may get a good deal if you’re alright buying a house where a murder has occurred. A home’s value makes a difference in home insurance rates, so you may see lower rates, thanks to the stigma surrounding your home.”
Lewis explains that claims don’t show forever, anyway. “Any claim opened with an insurance company will be marked against a property for a period of about 3-5 years,” he explains.
Orlowski advises you to take a proactive stance on home maintenance. “In any case, you can lower premiums by addressing known and provable defects,” says Orlowski. “Forget the house is haunted, and focus on the exposed wiring, asbestos ceiling, and bulging basement walls.”
After all, he says, “Getting these issues resolved will lower insurance rates, whether or not Casper occupies the premise.”
The Bottom Line
There are many factors that impact the cost of your home insurance. While that doesn’t necessarily include the crime itself, sometimes the implications of the crime – such as lasting damages, repeated claims or increased neighborhood crime – can all impact how much you pay.
“While the cost of home insurance can rise due to filing multiple claims, living in a high-crime neighborhood or changes in the value of your home,” says Shepherd, “you won’t see higher insurance rates just for having a murder or dark past associated with your home.”
“The scariest thing to an insurance company is someone who files a ton of claims in a short period of time,” Lewis tells us. “Now, that’s spooky!”
Featured image by Stevica Mrdja / EyeEm / Getty Images.