Do ‘most secure’ cities in U.S. boast low rates for home insurance?

Wondering where the “most secure” places to live are in the United States? A new study hands that honor to three areas: Madison, Wis.; Olympia, Wash.; and Lewiston, Idaho-Clarkston, Wash.

Wondering whether living in those places means your home insurance rates are low? The short answer: Safest isn’t always cheapest.

While these rankings may be good PR for the three regions cited in a new study by Farmers Insurance and Sterling’s Best Places, residents of those areas may not reap the benefits in terms of low premiums for home insurance.

A low crime rate and mild weather — factors that benefited the high rankings for Madison, Olympia and Lewiston-Clarkston — can lead to a drop in home insurance claims … eventually.

“If you have a community that has a reduction of claims, that would definitely have an impact on rates over time,” Jerry Davies, assistant vice president at Farmers. “But it isn’t a one-time thing, meaning you rank number one this year and your rates are going to go down immediately.”

Madison, Wis., ranks as the “most secure” large area in the country, according to Sperling’s Best Places and Farmers Insurance.

Instead, it may take three or four years before enough of a pattern has emerged to show that a region consistently boasts low crime or mild weather. At that point, rates could come down, Davies says.

Ups and downs for secure cities

As it stands, cities tend to move up and down on the annual Farmers-Sperling’s list.

“Many places these days that are doing the worst were doing the best a few years ago,” says Bert Sperling, head of Sperling’s Best Places.

Cities like Las Vegas and Phoenix, which scored well in many of the study’s categories a few years ago, now are struggling in areas such as housing and unemployment, Sperling says.

Another reason a high score on the list may not translate to lower homeowner’s insurance premiums is because the list takes into consideration factors like air pollution that have no bearing on insurance rates, according to Davies.

It’s also important to note that other factors play a role in insurance premiums. For example, a region may have a high crime rate, but if a homeowner takes such preventive measures as installing a burglary alarm or special locks, he or she likely will earn a lower rate, Davies says.

While only time will tell whether the most secure cities of 2011 turn their rankings into a trend, consumers who are looking to relocate can use the data as a starting point.

“Every city in America is a winner in many areas of the criteria, but these cities are exceptional because they rank on a lot of the criteria that makes up a secure city,” Davies says.

Since 2003, Farmers Insurance has worked with Sperling’s Best Places, a data analysis company, to come up with a list of the safest cities across the country. “After September 11, a group of us were talking about how that had changed the security landscape of America,” Davies says.

That conversation led to creation of the “Most Secure U.S. Places to Live” list, which is updated each year.

“When we’re talking about secure cities, it’s not just safety or crime,” Sperling says.

Security also means freedom from natural disasters like hurricanes and floods. Furthermore, the study takes into consideration such things as air pollution, life expectancy and economic stability (including home values, foreclosures and unemployment).

Marvelous Madison

Madison, the capital of Wisconsin, took first place among large metropolitan areas with a population of at least 500,000.

Among the reasons Madison scored so well were a low crime rate, a high life expectancy rate, a low unemployment rate and a low risk of earthquakes. State capitals like Madison tend to do well economically since government must keep running, which keeps people working, Sperling says. Likewise, Madison is home to the University of Wisconsin – another boon since people tend to enroll in college even during recessions, Sperling says.

Olympia, Wash., gets the nod for the “most secure” midsize U.S. area.

On top of all that, Madison has many tourist attractions, including the Madison Children’s Museum and 200-plus miles of biking and hiking trails.

Awesome Olympia

Olympia, Wash., claimed the distinction of being the most secure midsize U.S. city with a population of 150,000 to 500,000.

Residents of Olympia enjoy a low unemployment rate, relative freedom from extreme weather such as hurricanes and tornadoes, and a stable housing market, Sperling says. Like Madison, Olympia is a state capital. It’s also home to Evergreen State College.

The region is known as a hub for artists and musicians, and its mild weather makes it well-suited for outdoor activities at such places as the 3,000-acre Nisqually National Wildlife Refuge.

Lovely Lewiston-Clarkston

The combined region of Lewiston, Idaho, and Clarkston, Wash., won the small-town category for areas with a population of less than 150,000.

The region scored well because of low rates of violent and property crime, a low risk of hurricanes and tornadoes, a low unemployment rate and low air pollution, Sperling says. With access to the Pacific Ocean through river, rail and highway routes, the region is considered the most inland seaport in the West.

The area’s No. 1 ranking “is a testament to the elected officials in the area, the firefighters, police and all of the civil organizations that account for the safety and security of the area,” says Kris Pacey, Farmers’ executive director for Idaho. “When businesses and families look for a place to move, that’s a good indicator.”

–Tamara E. Holmes