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Territorial rating is a classification used by insurance companies to assess risk based on geographical location. For example, if you live in an urban environment with high crime rates, the provider might assume that you are at higher risk to have your property damaged or stolen. If you live in an area that is known for having a significant number of earthquakes each year, your territorial rating might be worse than others.
Territorial ratings are generally better in rural areas where there is a smaller perceived threat of accident, theft or vandalism. So an urban area with a high crime rate will most likely bring with it higher insurance rates than a rural area with low crime that does not have a history of being hit by natural disasters like hurricanes and earthquakes.
When you start shopping for homeowner's insurance, ask prospective providers what they say your territorial rating is and how they came to that conclusion. If you have any questions about their assessment, contact your state's Department of Insurance.