Annexation of townships, cities, and municipalities has come up a few times in C

Question

Annexation of townships, cities, and municipalities has come up a few times in Central Indiana in the last few years. In one such case some residents of Geist did not want to be annexed by Fishers. While their concerns were about taxes and property values, another consideration is insurance. Homeowners insurance can be effected by zip codes and their association with the zip codes of neighborhoods with higher crime rates, or incidences of property loss. Do you think this is a fair way to assess individuals risk level? Why/Why not?

Explanation / Answer

Yes, this is a fair process of assessing the risk levels. When an individual takes insurance, the asscoiated risks have to be evaluated. If a home is present in a location or an area with high crime rate, then the chnaces of burglary and theft are high for that particular house. Hence the property is at a higher risk when compared to properties in area of lower crime rate. Hence the insurance companies require higher premium to offset against this challange and provide adequate protection to its owner.

However, the zip codes need to be studied at regular intervals so that the correct and true picture is depicted. For example an area which was earlier classified as a high crime rate zone may now be a lower crime rate zone and hence the risk may have reduced. Hence the study has to carried out regularly to get a correct risk assesment and charge appropriate premiums based on risk.

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