Facts and Figures About Homeowners Insurance

When you’re a homeowner, it’s crucial to give careful consideration to obtaining homeowners insurance. A comprehensive home insurance policy offers valuable financial protection in the event of damage or destruction to your home and personal belongings due to covered events like fires, burglaries, or severe storms. As of 2020, statistics reveal that 93% of homeowners maintain active homeowners insurance coverage.

While homeowners insurance isn’t a legal requirement like auto insurance, many mortgage lenders mandate its acquisition. The cost of home insurance varies based on personal factors such as your location, home’s rebuilding cost, and claims history. Shopping around for multiple rate quotes can aid you in finding the most affordable home insurance policy for your specific circumstances.

Insights into Homeowners Insurance Claims and Data

The statistics surrounding homeowners insurance claims underscore the significance of this coverage in the United States. They also shed light on the diverse factors influencing claim types and frequencies across different regions. Here are recent statistics regarding home insurance claims:

– According to a study by the Insurance Information Institute (Triple-I), 6% of insured homes experienced a claim in 2020.

– In the same year, 97% of homeowners insurance claims pertained to property damage (Triple-I).

– Notably, wind and hail damage accounted for the majority (45.5%) of claims in 2020, followed by fire and lightning damage (23.8%) (Triple-I).

– In 2020, liability claims constituted only 2.3% of all homeowners insurance claims, marking the lowest rate since 2016 (Triple-I).

– Over the period 2016-2020, the average payout for property damage claims was $13,804. Fire and lightning claims had the highest average payout at $77,340 (Triple-I).

– Data indicates that liability insurance claims tend to yield higher payouts than property damage claims. The average payout for liability claims between 2016 and 2020 was $23,611 (Triple-I).

– Homeowners insurance premiums have been experiencing gradual increases in recent years. In 2019, the average premium rose by 1.8%, and in 2018, it increased by 3.1% (Triple-I).

– In 2020, around 27% of U.S. homeowners were estimated to possess flood insurance, although the National Flood Insurance Program (NFIP) suggests the actual number is lower (Triple-I).

– Earthquake insurance is becoming more prevalent, particularly in western states. In 2020, 23% of homeowners reported having earthquake coverage, compared to 15% in 2018 (Triple-I).

– A mere 43% of homeowners maintained an inventory of their personal belongings, as per a 2020 report (Triple-I).

Patterns in Property Damage Claims Over Time

Property damage claims represent the most common type of home insurance loss. In recent years, wind and hail claims took the lead in 2020, followed by fire and lightning claims. Theft consistently ranks as the least common form of property damage claim. The following table displays the percentage breakdown of various property claims between 2016 and 2020.

State-Specific Homeowners Insurance Data

The cost of homeowners insurance is influenced by numerous factors, with location being a significant determinant. While the average annual cost of home insurance in the U.S. stands at $1,383 for $250,000 in dwelling coverage, actual rates can be higher or lower based on your geographic area and other variables.

For instance, homeowners in southern states typically face higher rates due to heightened risks of severe weather events. Conversely, those residing on the west coast often enjoy lower rates since weather-related property damage claims are less likely. The subsequent table provides insights into the average homeowners insurance costs across all 50 states and Washington D.C., sourced from an analysis by Bankrate using Quadrant Information Services data.

Trends in the Home Insurance Industry

The landscape of the home insurance industry is in constant flux, shaped by various factors. Economic shifts such as inflation and the escalating frequency of natural disasters caused by climate change are some of the primary drivers influencing the property and casualty insurance sector.

For instance, due to the high risk of severe storms and a pervasive issue of insurance fraud, numerous home insurance companies have ceased offering new policies to homeowners in Florida. This trend is making it increasingly challenging for Florida residents to secure homeowners insurance.

Inflation is also contributing to rising home insurance premiums in many regions across the U.S. S&P data indicates that home insurance companies secured approval for rate increases in nearly all states between January 1, 2022, and May 18, 2022. Among these, California, Washington, and Arizona experienced the highest rate increases, although this situation may evolve with new rate submissions.

Statistics pertaining to homeowners reveal a notable trend of individuals relocating to areas with elevated risks of severe weather and natural disasters. Notably, counties with a high heat risk saw an average population growth of 4.7% between 2016 and 2020. In response, home insurance companies frequently raise rates in such areas to mitigate the potential risk of fire-related claims. Source: https://www.bankrate.com/insurance/homeowners-insurance/home-insurance-statistics/#methodology