Home insurance is a common form of insurance that people get for financial protection and peace of mind. According to 2016 data from Insurance Information Institute (III), 95% of U.S. homeowners have homeowner insurance. This is about 70 million homes that are insured. While there aren’t any legal requirements that homeowners must insure their homes, most mortgage lenders insist that borrowers cover the homes they finance. Experts recommend that you insure your home in order to protect yourself against the possibility of loss in the event of a natural disaster.
Based on a $250,000.00 dwelling coverage, the annual average premium for homeowners insurance was $1,477 according to 2020 data. According to a January 2020 study by National Association of Insurance Commissioners, average homeowners insurance premiums have increased by 3.1% since 2017, following a 1.6% increase for 2017. However, in 2018, the average renters’ insurance premium declined by 0.6%. This was the fourth consecutive year of decline. In 2017, renters insurance premiums fell 2.7%
Important home insurance claims statistics
The Claim Statistics tell a compelling tale about the importance and impact of home insurance in the United States. They also highlight the many factors that affect the frequency and type of claims in different areas of the country.
- A 2020 III survey found that homeowners are taking more steps to insure and protect their homes against natural disasters like flooding and hurricanes.
- A survey revealed that homeowners can still benefit from an increased effort to educate them about the different types and extents of homeowners insurance they can purchase.
- The III discovered that 5.7% of the homes covered by home insurance had filed a claim . More than 98% of these claims were due to property damage and not liability coverage. This includes theft.
- Most homeowners claim wind, hail and lightning are the most common. Fire and lightning claims are next at 32%.
- One in forty insured homes is subject to a wind or hail damage claim each year. Each year, approximately one in fifty insured homes have a claim for property damage due to water damage or freezing.
- According to III findings, fire and lightning losses costs decreased by 37% in 2019, a significant drop from 2018.
- For a $250,000 house, the 2021 average annual homeowners’ insurance premium was $1.312.
- J.D. Power conducted a study. J.D. Power found that approximately 65% homeowners opt to lower their premiums by bundling their home and car insurance policies with carrier discounts.
Statistics on home insurance claims 2021
According to the 2020 Home Trends Report, the costs of all peril loss in 2019 dropped by 13% over the previous year. This result ended a trend of all peril losses that was higher than usual for the past two years.
The Home Trends Report found that wind, lightning, and fire caused catastrophic losses fell 32% from the previous year. Although some states were affected by severe wildfires or hurricanes, hailstorms, flooding, and other disasters in 2019, they were less common than 2017 and 2018.
However, the severity of weather-related water incidents increased in 2019. 2019 was the second-wettest year on record. 90% of all 2019 catastrophe losses were caused by hail and wind perils. These often correspond to water damage.
Based on III statistics, the table below highlights the main causes of property damage claims made during the years 2014-2018:
| Causes of property loss | 2014 Percentages | 2015 Percentages | 2016 Percentages | 2017 Percentages | 2018 Percentages |
|---|---|---|---|---|---|
| Hail and wind | 28.8 | 21.1 | 32.8 | 41.7 | 34.4 |
| Lightning and fire | 24.6 | 22. | 25.9 | 32.8 | 32.7 |
| Water damage and freezing | 33.6 | 45.8 | 30.5 | 18.4 | 23.8 |
| Theft | 2.4 | 1.8 | 1.8 | 1.0 | 1.0 |
| Other property damage | 6.7 | 5.6 | 5.4 | 4.1 | 6.2 |
While the trend lines aren’t perfect, it is evident that insurers have been seeing more wind, hail, lightning and fire claims over the past five years. This is in line with the increase in damage caused by major tornadoes, hurricanes, and forest fires over recent years. This is not necessarily due to an increase in these events. The III to increased population growth in storm-prone areas is the most important reason for increasing loss.
The declining percentage of theft claims is consistent with the long-term trend of decreasing theft crimes.
Statistical data on home insurance state-by-state
According to the National Association of Insurance Commissioners, states experienced growth in direct premiums for home insurance in the first half of 2020 compared with the first quarter of 2019. However, there were some states that reported a decrease in DPW. New York (-1.0%) and Illinois (-1.1%) reported the highest DPW declines. Other states that had declining DPW included Hawaii (-0.4%) and North Dakota (–0.6%). Delaware (-0.7%). Vermont (–1.4%), West Virginia (–3.3%).
The DPW in all other states increased for the same period. This was followed by Idaho (+7.0%) and Arkansas (+5.9%), Iowa +5.3%), Florida (+5.1%).
The most expensive state for home insurance
It’s not surprising that homeowners who live in areas more vulnerable to tornadoes and severe storms often pay the highest home insurance premiums. The average national annual home insurance premium is $1,312. Home insurance policies for homes located in eastern Colorado, Kansas and Nebraska, Oklahoma and South Dakota often cost more than those written elsewhere in the country. These areas are known as ” Tornado Alley“.
| State | Annual average premium |
|---|---|
| Oklahoma | $3,519 |
| Kansas | $2,694 |
| Nebraska | $2,816 |
| Arkansas | $2,142 |
| Texas | $1,863 |
The least expensive state for home insurance
States that don’t experience high numbers of severe weather events tend to have lower home insurance. There are other factors that can influence your home insurance costs.
At $376, Hawaii is home to the lowest annual average home insurance premium. Although Hawaii doesn’t experience as much hurricane activity as the southeast, rates would not be affected by weather. Hawaii’s home insurance policies don’t cover hurricanes, and the rates reflect this risk elimination. However, many residents are required to purchase separate hurricane policies. These are the states that might have the lowest premiums for home insurance.
| State | Annual average premium |
|---|---|
| Hawaii | $376 |
| Delaware | $680 |
| Vermont | $686 |
| New Hampshire | $724 |
| Oregon | $712 |
These five states do not experience significant, repetitive weather events.
Many factors can impact home insurance premiums. Even within the same state, there are several variables that could affect the rate. For example, home-insurance premiums on the coast of South Carolina may be much higher than those for policies written at inland dwellings. This example would show that hurricane risk is the main factor.
Similar to the above, premiums can differ greatly by ZIP code depending upon crime patterns. Your home insurance rates will likely rise if your dwelling is burglarized. However, rates may be higher if there are higher property crimes in your area.
Statistics on the home insurance industry
In the first half 2020, the overall property and casualty industry made a net profit of $27 billion . This represented a 23% decrease in revenue from 2019. It is believed that the COVID-19 pandemic, which caused a global decline of financial markets worldwide, contributed to this loss.
In 2019, the total premiums written for multiperil home insurance was $103,995,754,245. Six insurance companies represented half of the U.S. market in that year. This includes all U.S. Territories and Canada. State Farm had a ratio of 58.75 gross direct loss (DL), to earned premiums (EP) in 2019. Six companies had a lower DL/EP than 60.0. At 38.72, farmers had the best ratio.
Although there are many factors that influence overall profitability, the loss ratio can provide useful information about an insurer’s financial health. A ratio greater than 100.0 indicates that the company is making more claims than it is making in premiums. This could indicate poor financial health. A ratio lower than 60 is considered a positive indicator. Financial prospects will improve if this number falls.
| Company | Market Share % | Cumulative Market Share: % | Earn Direct Premiums* | Ratio DL/EP |
|---|---|---|---|---|
| State Farm | 17.97 | 17.97 | $18.5 billion | 58.75 |
| Allstate | 8.38 | 26.36 | $8.5 Billion | 52.25 |
| United Service Auto Association | 6.57 | 32.93 | $6.5 Billion | 63.51 |
| Liberty Mutual | 6.48 | 39.41 | $6.7 Billion | 50.95 |
| Farmers Insurance | 5.71 | 45.13 | $5.9 Billion | 38.72 |
| Travelers Insurance | 4.08 | 49.20 | $4 billion | 55.84 |
*Rounded to the nearest $100 million
Average cost of homeowners insurance by company
Here are the average annual premiums charged (by market share), by top U.S. home insurers for policies insuring a $250,000 residence
| State Farm | $1,503 |
| Allstate | $1,458 |
| USAA | $992 |
| Farmers | $1,980 |
| Travelers | $1,269 |
| American Family | $1,295 |
| All over the country | $1,042 |
| Chubb | $1,630 |
| Erie Insurance | $897 |
| Auto-Owners | $1,165 |
The actual premiums for any home policy may vary depending on the various factors mentioned above. Every person looking for home insurance should be aware of all these factors as well as the discounts available depending on their individual circumstances.
