Home Insurance Facts and Statistics: Coverage & Claims

Home Insurance Facts and Statistics: Coverage & Claims

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At least 85% of homeowners in the U.S. have homeowners insurance, and policies cost an average of $1,445 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 the house but also 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 (NAIC), 79.09% of which are HO-3 policies.

Purchased home insurance policies

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, a ValuePenguin survey found that 47% of homeowners are unsure of what their insurance covers. J.D. Power similarly found that 52% of homeowners don't have a complete understanding of their coverage. 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 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.

1997
2013
Average claim payment$2,676$8,787
Claims paid per 100 insured homes8.65.0

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 one per 29 insured homes per year, or about 3.5% of insured homes.

Trend data from Lexis Nexis shows that Colorado and Nebraska consistently have the highest loss costs out of all 50 states and the District of Columbia. From the seven-year period between 2013 and 2019, these two states have had the most expensive total losses. In 2019 — the most recent year for which Lexis Nexis data is available — Colorado topped the list.

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 77% of all homeowners insurance claims.

Home insurance claims

Fire caused the most costly homeowners insurance claims, accounting for 25% 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.

Most Costly Homeowners Insurance Claims

Cause of homeowners insurance claims: property vs. liability losses

The Insurance Services Office (ISO) found that 98.1% of homeowners insurance losses are due to property damage. Similar to Travelers, wind and hail damage accounted for 34.4% of home insurance losses, according to the ISO's analysis.

The balance of nonproperty damage losses comes from liability cases such as personal injury, medical payments and credit card claims. Delving deeper into the numbers, we can look at what usually causes the property damage.

Home insurance property and liability claims by loss category

Property and liability claims as a percentage of total homeowners insurance losses

  • Wind and hail (34.4% of total losses)
  • Fire and lightning (32.7%)
  • Water damage and freezing (23.8%)
  • Other property damage, including vandalism and malicious mischief (6.2%)
  • Liability for bodily injury and property damage to others (1.8%)
  • Theft (1.0%)
  • Medical payments (0.1%)
  • Credit card and other (less than 0.1%)

Theft accounted for just 1% of homeowners insurance losses. When we look at what possessions are most frequently mentioned in homeowner claims, data from Enservio shows that jewelry tops the list. Electronics and apparel are also common subjects of claims that involve damage or theft.

Household iterms that are includes in insurance claims
This graph shows how often household items are in home insurance claims

Cost of homeowners insurance: change over time

The average annual cost of homeowners insurance in the U.S. is $1,445, according to ValuePenguin's 2021 analysis 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 15% between 2013 and 2018.

Type of policy
2013 total premiums
2013 average premium
2018 total premiums
2018 average premium
Change in average premium

HO-1

$1.04 billion$1,149$1.57 billion$1,63342%
HO-2$2.69 billion$1,110$4.18 billion$1,1312%
HO-3$55.05 billion$1,095$60.33 billion$1,24914%
HO-5$8.26 billion$1,061$10.93 billion$1,39632%
HO-8$301 million$937$285 million$1,0037%
Total$68.87 billion$1,085$78.30 billion$1,25115%

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 2019, the five top insurers accounted for 45% of direct premiums written for homeowners multiperil policies. This pattern has been fairly consistent over the past five years — in 2014, the top five insurers held 47% of the total market share — though the set of top insurers has changed.

Insurer
Direct premiums written (2019)
Homeowners insurance market share (2019)
State Farm$18,698,346,99017.97%
Allstate$8,723,237,6068.38%
USAA$6,835,803,7956.57%
Liberty Mutual$6,745,863,8096.48%
Farmers$5,943,814,2795.71%
Travelers$4,240,932,8224.08%
American Family$4,057,498,9593.90%
Nationwide$3,244,683,0773%
Chubb$2,989,473,6452.87%
Erie Insurance$1,746,390,2021.68%

Perils covered by homeowners insurance

Named peril policies cover dwelling and property damage from just those situations that are listed within your policy. Named perils can typically include:

  • Fire and lightning
  • Theft
  • Volcanic eruption
  • Windstorm or hail
  • Riots
  • Damage from aircraft
  • Vandalism
  • Damage from the weight of ice, sleet or snow
  • Freezing pipes
  • Falling objects
  • Explosions
  • 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 earthquake insurance policy.
  • Sinkholes: Only Florida and Tennessee require homeowners insurance companies to offer insurance coverage for sinkhole damage.
  • Flooding: Homeowners would need to purchase a separate flood insurance policy from the National Flood Insurance Program (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.

Sources

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