Insurance is one thing most of us have, yet we rarely think about – until we really need it. Homeowners have a lot on the line if their home floods, a break-in occurs, or someone slips and falls on their property, so insurance is something we should take seriously.
Here are some highlights of the homeowner’s insurance industry for you to consider:
How many homeowners file claims?
Last year, approximately 1 out of every 15 U.S. homeowners with an insurance policy file a claim, or approximately 6.6% of all insured homeowners.
That’s up from 5.9% of all insured homes filing claims in 2015 and 5.3% in 2014.
To put those numbers in perspective, a 2016 Insurance Information Institute poll found that 93% of homeowners had homeowners insurance.
In the five years between 2010-2014, the home and property insurance industry suffered some of its biggest losses in history, with a record-high 7% of insured homes filing a claim.
Claims filed on account of wind and hail damage led the way with 3.1% of all insured homes submitting a claim.
How much does it cost insurers?
2016 was a historically volatile year for home insurance companies, with more catastrophe-related claims surpassing their previous high 2012 when Superstorm Sandy hit.
In fact, 15 separate weather and climate events occurred in 2016, causing more than $1 billion in economic losses, an increase of 7.6% over 2015’s losses.
In 2015, net homeowners insurance losses totaled $41.2 billion, up from $39.9 billion in 2014.
Why do we file claims?
All forms of property damage – including theft – account for 97.3% of all homeowners insurance claims. (Most categories of homeowners insurance loss fall under that umbrella, with just a few exceptions like credit card fraud, medical incidents, etc.)
Claims related to wind or hail damage are the most common, but claims over a home or property being struck by lightning or fire damage are the most costly.
In fact, about one in 35 insured homes has a property damage claim related to wind or hail each year.
One in 50 insured homes has a property damage claim caused by water damage or freezing each year.
One in 235 insured homes has a property damage claim due to theft each year.
One in 290 insured homes has a property damage claim related to fire and lightning.
Only about one in 1,015 homeowners policies have a liability claim resulting from bodily injury or property damage that the homeowner caused to others.
The top causes of homeowner claims:
(Ranked by frequency of claims per 100):
3.13 Wind and hail
1.86 Water damage and freezing
0.99 All other property damage
0.47 Theft
0.38 Fire, lightning, and debris
0.10 Bodily injury and property damage
0.04 Medical payments
0.01 Credit card and others
Ranking homeowner losses per average claim:
$39,791 Fire, lightning, and debris
$20,453 Bodily injury and property damage
$8,041 Wind and hail
$7,958 Water damage and freezing
$4,800 All other property damage
$3,786 Theft
$2,598 Medical payments
$554 Credit cards
How much are homeowners paying for their insurance?
The average homeowner now pays $1,132 per year in homeowners insurance premiums.
The price tag on homeowners insurance has risen significantly in recent years, with a 3.3% increase in 2014 following a 6% increase in 2013.
The largest homeowners insurance companies in the U.S.:
- Allstate Corp.
Direct premiums written: 7,926,984
Market share: 8.9%
- Liberty Mutual
Direct premiums written: 5,993,803
Market share: 6.7%
- Farmers Insurance Group of Companies (3)
Direct premiums written: 5,284,511
Market share: 5.9%
- USAA Insurance Group
Direct premiums written: 5,000,407
Market share: 5.6%
- Travelers Companies Inc.
Direct premiums written: 3,305,427
Market share: 3.7%
- Nationwide Mutual Group
Direct premiums written: 3,249,456
Market share: 3.6%
- American Family Insurance Group
Direct premiums written: 2,609,366
Market share: 2.9%
Renters can be insured, too
Homeowners are not the only ones that utilize property and dwelling insurance, as many renters choose to take out renters’ policies, as well.
In fact, 41% of all renters have renters’ insurance policies (compared to the aforementioned 93% for homeowners.)
Despite record losses by insurers and the skyrocketing cost of rent in the U.S., prices for rental insurance have remained stable. In fact, the average renter’s insurance premium climbed only 0.5% in 2013 and then 1.1% in 2014.
Cataloging possessions
For anyone who’s experienced theft, water damage or a fire in their home, you know that filing a claim is far more efficient and effective if you have a detailed list of your possessions for the insurance company.
However, as of 2015, only 52% of homeowners say that they keep an inventory list of their things.
Does where you live impact your insurance?
Where you live is a big factor for insurers to gauge their risk and price policies. Some states that are prone to high incidents of flooding, high wind events like hurricanes and tornadoes, earthquakes, and other natural disasters are priced highest.
In fact, Florida and Louisiana have so many homeowners insurance claims that the average policy premium stands at $2,0005, dwarfing premiums in the rest of the country.
Oregon, however, enjoys the lowest homeowners insurance premiums in the country with an average of only $574.
What about those dreaded sinkholes we see on the TV news?
Every once in a while we’ll turn on the news and see a news story about a sinkhole that opened in the ground, like the one in Tampa, Florida in 2013 that swallowed a whole house.
Sinkholes are actually fairly common, with thousands of them appearing in the U.S. each year. However, the vast majority are small and don’t cause any damage, despite what we might think after seeing those big cases so highly publicized.
In fact, Florida, Texas, Alabama, Missouri, Kentucky, Tennessee and Pennsylvania experience the most sinkholes every year according to the U.S. Geological Survey.
So what would happen if a hole opened in the ground and your house fell in? You’d probably be out of luck, as most homeowners policies don’t cover sinkhole damage. However, both Florida or Tennessee require insurance companies to cover sinkhole destruction for homeowners.
Homeowners insurance companies are doing a great job!
Despite record payouts, rising premiums, and the depersonalized nature of most industries these days, homeowners insurance companies are garnering their highest ever customer satisfaction ratings.
In fact, according to the J.D. Power 2017 U.S. Property Claims Satisfaction Study, U.S. consumers awarded home insurers a score of 859 out of 1,000 points. The study measured satisfaction levels for five categories: settlement; first notice of loss; estimation process; service interaction; and repair process. 859 is an all-time high score, eclipsing the cumulative historical average for the industry of only 846.