Find the Cheapest Homeowners Insurance Quotes in Your Area
At least 85% of homeowners in the U.S. have homeowners insurance, and policies cost an average of $1,083 per year. While it's not a required form of coverage by the government, home insurance is typically required as a condition of having a mortgage and is very valuable in the protection it offers homeowners. Home insurance policies generally provide coverage for damage to a home's structure, damage to your personal property, and liability coverage in case you're considered at fault for property damage or bodily injury to another party. Below, we've broken down key facts and figures on home insurance policyholders, the cost of coverage, home insurance claims and other statistics to give you a better sense of the market.
Homeowners Insurance Coverage Purchased
Homeowners insurance is a valuable policy option that provides coverage for not just a house, but its contents and the owner's liability. Approximately 85% of homeowners have home insurance policies, according to data from the National Association of Insurance Commissioners, with 78% of those being HO-3 policies.
Dwelling fire is the most limited form of homeowners insurance, in which coverages are purchased individually. HO-1 and HO-2 are considered named perils policies, meaning they only cover damage that was caused by a peril specifically named in the policy, such as theft. HO-3 and HO-5 policies, on the other hand, are open-peril policies, since they cover any cause of damage to your home's structure except those specifically excluded within the policy. HO-8 policies are generally limited to older, higher value homes.
Unfortunately, 52% of homeowners don't have a clear understanding of their coverage, according to a recent J.D. Power survey. Many policyholders believe the amount of dwelling coverage they have is correlated to their home's real estate market value, when instead it's tied to the home's cost to rebuild. Homeowners also have trouble identifying the replacement value of their homes—a survey by Marshall & Swift/Boeckh found that 60% of homes are undervalued with regard to insurance, with an average undervaluation of 17%.
Homeowners Insurance Claims: Cost and Frequency
The average payment per homeowners claim in the U.S. was $8,787, according to the most recent data from the Insurance Research Council, and there were five claims filed and paid per 100 insured homes in the last year. Claim frequency has decreased over the last two decades, whereas claim severity, the average amount paid per claim, has increased significantly.
|Average Claim Payment||$2,676||$8,787|
|Claims Paid Per 100 Insured Homes||8.6||5.0|
If you exclude catastrophes, such as hurricanes and severe storms, the average claim size remains about the same ($8,772) but the frequency of home insurance paid claims drops to 1 per 29 insured homes per year, or about 3.5% of insured homes.
The most common causes of home insurance claims, from an analysis of Travelers Insurance policyholders, are wind, nonweather water damage, hail, weather-related water damage and theft. Altogether, these five causes make up 76% of all homeowners insurance claims.
Fire caused the mostly costly homeowners insurance claims, accounting for 23% of claim costs, though it wasn't one of the most common claims filed. All of the other top perils in terms of total-claims cost were incidents that made the most common claims list: hail, windstorm damage, nonweather water damage and weather-related water damage.
Cost of Homeowners Insurance
The average annual cost of homeowners insurance in the U.S. is $1,083, according to ValuePenguin's 2018 analysis of using a sample policy in each state. The average money spent on homeowners insurance coverage has risen in the past several years, across all forms of policy, based on the NAIC's survey of premiums spent. Average money spent on homeowners insurance premiums increased 29% between 2010 and 2015.
|Type of Policy||2010 Total Premiums||2010 Average Premium||2015 Total Premiums||2015 Average Premium||Change in Average Premium|
|Dwelling Fire||$647 million||$528||$1,038 million||$665||26%|
|HO-1||$969 million||$1,064||$1,320 million||$1,412||33%|
|HO-2||$2,416 million||$993||$3,431 million||$1,129||14%|
|HO-3||$46,093 million||$909||$57,998 million||$1,173||29%|
|HO-5||$6,566 million||$910||$9,679 million||$1,231||35%|
|HO-8||$224 million||$776||$306 million||$986||27%|
|Total||$56.9 billion||$906||$73.8 billion||$1,168||29%|
Homeowners Insurance Companies: Market Share
While there are dozens of homeowners insurance companies in the U.S., a large portion of the market is dominated by just a few. In 2017, the five top insurers accounted for 46% of direct premiums written for homeowners multiperil policies. This pattern has been fairly consistent over the past five years—in 2012 the top five insurers held 47% of the total market share—though the set of top insurers has changed.
|Insurer||Direct Premiums Written (2017)||Homeowners Insurance Market Share (2017)|
Perils Covered by Homeowners Insurance
Named peril policies cover dwelling and property damage from just those situations which are listed within your policy. Named perils can typically include:
- Fire and lightning
- Volcanic eruption
- Windstorm or hail
- Damage from aircraft
- Damage from the weight of ice, sleet or snow
- Freezing pipes
- Falling objects
- Smoke damage
- Damage due to vehicles
- Electrical current damage
- Water damage from plumbing, heating or A/C overflow
- Damage from a water heater cracking, tearing and burning
Depending on where you live, and the type of policy you have, some of these perils may not be included. For instance, in states prone to hurricanes, such as Florida and Texas, you will likely have to purchase separate wind and hail insurance coverage.
All perils coverage covers dwelling and property damage from all situations except those specifically excluded. Perils that are consistently excluded include:
- Earthquakes and other earth movement: Homeowners in earthquake-prone states, such as California, would need to purchase a separate policy.
- Sinkholes: Only Florida and Tennessee require homeowners insurance companies to offer coverage for sinkhole damage.
- Flooding: Homeowners would need to purchase a separate flood insurance policy from the NFIP or a private flood insurance company in order to be covered for flood damage.
- Acts of war and acts by the government: For instance, property that's seized by the government through eminent domain wouldn't be covered.
- Nuclear accidents: Damage from nuclear accidents would typically be covered by the nuclear power plant involved.
- NAIC 2017 Dwelling Fire, Homeowners Owner Occupied, and Homeowners Tenant and Condominium/Cooperative Unit Owner’s Insurance Report
- NAIC 2012 Dwelling Fire, Homeowners Owner Occupied, and Homeowners Tenant and Condominium/Cooperative Unit Owner’s Insurance Report
- FRED: Federal Reserve Bank of St. Louis Housing Inventory Estimate
- J.D. Power 2017 U.S. Home Insurance Study
- Marshall & Swift/Boeckh 2013 Insurance to Value (ITV) Index
- Insurance Research Council: Trends in Homeowners Insurance Claims
- Travelers Insurance Review of U.S. Homeowners Insurance Claims
- NAIC 2018 Market Share Report for Property/Casualty Groups and Companies
- NAIC 2013 Market Share Report for Property/Casualty Groups and Companies