Life is unpredictable. You can spend years investing time, energy, and money into your home and have it all taken away in a heartbeat. At least with insurance coverage, there’s some hope that all is not lost. But do you have all the home insurance facts to choose the right policy for your home? Are you aware of how much policies cost and what they cover? Home insurance may not be the most exciting subject to cover, or the easiest to comprehend, which is why we compiled some of the most informative and trustworthy facts and figures on the importance of insuring your home and personal property.
Key Home Insurance Statistics and Facts to be Aware Of
- 85% of homeowners in the US have insurance.
- There are 8 types of homeowners insurance.
- The US homeowners market is valued at $105.7 billion.
- Florida homeowners pay the highest insurance rates.
- The average home insurance cost in the US is around $1,083 a year.
- Smart security systems can cut rates by 20%.
- Bundle deals make for significant savings.
- The average home insurance claims payment per household in the US is $8,787.
- Damage from winds is the most common cause of home insurance claims.
- Only 37% of renters invest in renters insurance.
What Do You Need to Know About Homeowners Insurance?
1. 85% of US homeowners have insured their homes.
Today, homeowners insurance isn’t just the right decision, it’s a necessity. All mortgage companies require borrowers to have insurance and will not approve a loan or real estate transaction without proof of it. Although it isn’t required by law, landlords might also ask renters for coverage.
2. Two-thirds of homes in the US are underinsured, home insurance stats indicate.
Being underinsured means that homeowners don’t have sufficient coverage to pay for the repair cost in case of a fire or other damages. Although most homes in America are underinsured by around 22%, some are underinsured by as much as 60%, mostly due to rising construction costs.
3. There are 8 types of homeowners insurance.
According to the home insurance facts, these range from a bare-bones policy covering direct damage and personal liability (HO-1 and HO-2) to policies that insure against all risks (HO-5). Other options are specifically designed for mobile homes and older homes (HO-7 and HO-8, respectively).
4. HO-3 policies cover 78% of homeowners.
HO-3, the most popular option among homeowners, offers broader homeowners insurance coverage against all hazards excepting those that are specifically excluded from the policy. It also protects personal belongings against all disasters or damages specifically named in the policy.
5. Homeowners can choose from three types of coverage, the home insurance facts indicate.
These include cash value, replacement cost, and guaranteed or extended replacement cost coverage.
The first may be the cheapest option, but it won’t provide owners with enough funds to rebuild their house in case of a severe disaster. Replacement cost covers the replacement of your property or possessions up to the policy limits. Still, it doesn’t include a deduction for depreciation, whereas the last option pays 20% to 30% over the policy coverage limit.
6. Not everything is covered by home insurance.
(Investopedia, Fool, HuffPost)
One of the interesting facts about home insurance is that most policies cover damages from volcanoes and meteors, but they don’t offer payment for floods, earthquakes, and other natural disasters. This means homeowners will need to spring for extra deductibles, especially residents in high-risk areas for extreme weather events.
Additionally, the full value of personal belongings, such as jewelry, firearms, or electronics, are not covered by home insurance and require a more comprehensive policy or an added rider.
7. Homeowners insurance coverage doesn’t include poor maintenance.
Put simply, failure to properly maintain the home will result in owners paying for repairs out of pocket.
Home Insurance Statistics in the US
8. The US homeowners market is valued at $105.7 billion.
(IBISWorld, Mordor Intelligence)
Growing from $104 billion in 2018, the American home insurance market is expected to reach a whopping $125 billion by 2024.
9. With a market share of 19.97%, State Farm is the biggest insurance company in the home insurance market.
Next in line are Allstate with a market share of 8.94% and Liberty Mutual with 6.62% of the home insurance market, 2019’s home insurance industry statistics show.
10. Florida homeowners pay the highest insurance rates.
(Bankrate, ValuePenguin, Trusted Choice)
Getting an exact homeowners insurance quote in any state is hard because prices change all the time—and there are many factors companies take into consideration when determining costs. Even though some estimates put average annual premiums in the Sunshine State at $3,575, and others at $1,993 or $1,727, homeowners insurance rates are still higher here than the nationwide home insurance premiums.
In addition to storms, the Florida home insurance facts indicate that this state has high incidences of fraud. Assignment of benefits (AOB) scams in Florida increased by 900% from 2008 to 2018, prompting the Senate to take action against dishonest contractors and pass a bill to reduce the amount of AOB fraud.
11. The risk of storms on the Atlantic and Gulf coasts increases premiums.
An average of five hurricanes hit the US coastline every three years, two of which are ranked categories three or higher. Due to the frequency and severity of devastating wind storms, home insurance statistics by state show Louisiana, Oklahoma, and Texas in fact have higher home insurance rates than other states.
12. Texans pay around $1,937 in annual home insurance premiums.
(Homeowners Insurance Cover)
Homeowners insurance costs are higher in Texas as well ($161 a month compared to the nationwide average of $99). The Lone Star State not only sees its share of tornadoes, wildfires, and hurricanes, but it also has a high rate of property crimes, which has led to higher premiums in home insurance, statistics in Texas reveal.
Cost of Home Insurance
13. The average home insurance cost in the US is around $1,083 a year.
The amount of money homeowners spent on insurance from 2010 to 2015, has increased across all policies, particularly by 29% on HO-3 policies and by 35% on HO-5, the most comprehensive premium.
14. People with a fair credit score pay an average of 32% more on home insurance than people with excellent credit, home insurance coverage statistics show.
Poor credit scores can even double your premium. This might sound a bit unfair, which is why California, Massachusetts, and Maryland prohibit companies from taking credit scores into account when setting insurance rates.
15. Wood burning stoves up insurance costs by 2%.
(Insurance.com, Young Alfred)
Heating equipment is responsible for 15% of all home fires, so it makes sense that high-risk heating devices would increase your insurance premiums. Living close to a fire station, however, can get owners a 4% discount on home insurance quotes.
16. Swimming pools increase rates by 1%.
If you’re concerned about a home insurance cost increase, statistics show that having a swimming pool in your home will add from $50 to $70 to your annual insurance bill.
17. Smart security systems can cut rates by 20%.
Home automation and other smart security tech give you peace of mind as well as lower home insurance payments.
18. New constructions can save you an incredible 35% in home insurance quotes.
The older the home, the higher the premium. Homes older than 45 years hike up rates by 3%, while homes that were built between 30 and 45 years ago have 1% to 2% higher premiums. Fun facts about home insurance tell us that brick homes reduce insurance rates by 6%, whereas homes made of fire-resistant materials cost 12% less to insure.
19. Bundle deals make for significant savings.
Buying home and other types of insurance, such as car or life insurance, from the same company can result in 10% discounts for homeowners. Still, the best way to save is to compare home insurance quotes from various companies before making a final decision.
Homeowners Insurance Claims Statistics
20. The average home insurance claim payment per household in the US was $8,787 in 2013.
In 1997, there were around 8.6 claims per 100 insured homes with an average claims payment of $2,676. In 2013, on the other hand, the frequency of claims declined to 5 per 100 insured homes, but the claims severity (i.e., the amount paid per claim) increased.
21. Damage from winds is the most common cause of home insurance claims.
Judging by the home insurance statistics, the five most common causes of claims include wind damage (a quarter of all insurance claims), followed by water damage (non-weather-related making up 19% and weather-related, 11% of all claims), hail (15%), and theft (6%).
22. Fire is the costliest homeowners insurance claim.
Fire may not be among the five most common causes of claims, but it is the most expensive. Payments for damages caused by fires are at an average of $40,000, home insurance claim statistics point out.
23. Dog bites make up a third of liability claims.
For this reason, insurance companies have blacklisted certain breeds of dogs. So if your dog breed isn’t covered, think about getting a separate liability policy to protect yourself against possible lawsuits.
24. Hurricane deductibles range from 2% to 5% of the value of your insurance policy.
If you live in one of the areas that are frequently affected by hurricanes, it pays to have as much homeowners insurance coverage as you can afford. Some states won’t reimburse your insurance claim without a hurricane deductible in place.
Renters Insurance Statistics and Facts
25. Only 37% of renters invest in renters insurance.
Contrary to popular opinion, your landlord’s policy doesn’t cover your personal possessions. So although it isn’t required by law, renters insurance is a good idea because it covers your belongings against damage, and it protects you against lawsuits for accidents that might occur on your rented property.
26. As many as 37% of millennials don’t have renters insurance because they don’t fully understand what it does.
(Showbiz Cheat Sheet)
29% of the millennials surveyed thought that renters insurance is expensive, expecting it to cost around $1,000 a year. However, the renters insurance statistics point to this as one of the most affordable types of insurance, with an average annual premium of just $187.
27. The average renters insurance premium decreased by 2.7% in 2017.
(III, Effective Coverage)
According to the 2010 US Census, there were more renters than homeowners in some of the biggest cities in the country, especially in New York, where renters occupied 69% of households.
People might think that big city life comes with high insurance rates, but the renters insurance statistics and facts in New York state that rates are going down. In NY, $12 a month can cover personal property claims up to $15,000.
28. Mississippi has the highest renters insurance rates in the US.
It costs $244 yearly to have renters insurance in Mississippi, the highest premium in the US. This is probably why only 13% of renters in this state have purchased an insurance policy.
What percentage of people have homeowners insurance?
Although the majority of Americans have home insurance, too many of them falsely believe that their insurance will pay for all damages in case of a natural disaster. For instance, 73% of homeowners surveyed in 2016 in California didn’t have flood insurance, while 52% of owners don’t have a clear understanding of what their policy covers.
(Insurance Journal, ValuePenguin)
How often do people use homeowners insurance?
In 2017, only 6% of insured homes made a claim on damages. Stats show that people who make one claim are more likely to make another and another, so insurance companies adjust their premiums accordingly. In other words, the more claims you make, the higher rates you’ll end up paying. For instance, filing a single fire claim can increase rates by 20%, while a second fire claim will result in 44% higher premiums.
What is the most common homeowners insurance claim?
Claims related to wind and hail damage are among the most common, along with water damage (which may or may not be caused by the weather) and property damage claims. Along with theft, these causes account for 76% of all homeowners insurance claims in the US.
What percentage of homes are underinsured?
Some estimates put as many as three in five homes as being underinsured. Plus, 40% of homeowners who have remodeled their home don’t immediately update their insurance policy, resulting in even more homes with insufficient coverage.
How much does home insurance cost per month?
On average, monthly insurance premiums are around $35 per every $100,000 of the home’s value. Still, the amount you pay mostly depends on your zip code, the homeowners insurance quote you get from insurance companies, and the number of extra deductibles you wish to purchase to make sure that your home is covered against any and all damages.
Owning a home is more than decorating and picking out furniture. There are responsibilities that come with being a homeowner, and protecting your property and investment is one of them.
So whether you’re a first-time owner or a tenant or you’ve had your property for years, being aware of the basic home insurance facts and protecting your belongings against all the things life can throw at you is the smart and responsible course of action.
- Effective Coverage
- Homeowners Insurance Cover
- Insurance Journal
- Mordor Intelligence
- Showbiz Cheat Sheet
- Trusted Choice
- USA TODAY
- Young Alfred