June 24, 2024
Homeowners insurance statistics and facts

 

If you own a home, it’s important to consider investing in homeowners insurance. A comprehensive home insurance policy provides valuable protection for your finances if your home and personal belongings are damaged or destroyed due to a covered loss like a fire, home break-in or severe storm. As of 2023, data show that 88 percent of homeowners have an active homeowners insurance policy.

 

While home insurance is not legally required (unlike auto insurance), many mortgage lenders require customers to obtain coverage. The cost of home insurance is dependent on a variety of personal factors like your location, the cost to rebuild your home and your claims history. Getting quotes from multiple home insurance providers can help you find the cheapest policy for your situation.

 

The latest statistics on homeowners insurance claims

Homeowners insurance claim statistics tell a compelling story about the importance of home insurance in the United States. Data also highlight the many factors that influence the type and frequency of claims in different parts of the country.

 

Recent home insurance claims statistics:

According to a study, 5.3% of all insured homes had a claim in 2021. (Insurance Information Institute [Triple-I])

Only about 47% of homeowners said they prepared an inventory of their personal belongings to help document losses, according to a 2023 report. (Triple-I)

Bankrate’s 2023 Extreme Weather Survey indicated that 57% of U.S. adults have incurred costs from extreme weather over the past decade, with a pronounced impact in the Southern U.S., where 63% of residents reported such expenses. (Bankrate)

Between 2017 and 2021, the average property damage claim payout was $15,091. Fire and lightning claims had the highest average payout, which was $83,519. (Triple-I)

57% of Americans believe that the climate, extreme weather and the environment will negatively affect their finances in the next 10 years, according to Bankrate’s 2023 Extreme Weather Survey. (Bankrate)

While liability insurance claims are rare (making up just 2.3% of all homeowners insurance claims), they often have higher payouts than property damage claims. Between 2017 and 2021, the average liability insurance claim payout was $25,323. (Triple-I)

What are the most common causes of homeowners insurance claims?

Property damage claims are the most common type of home insurance loss. In 2021 (the most recent data available), wind and hail claims were the most common, followed by fire and lightning claims. Theft is consistently the least common type of property damage claim. However, the main causes of property loss have fluctuated over the last several years. In the table below, you can see the percentage of various property claims between 2017 and 2021.

 

Cause of property loss 2017 2018 2019 2020 2021

Wind and hail 48.0% 39.5% 38.3% 47.8% 39.4%

Fire and lightning 26.2% 26.0% 21.5% 21.9% 24.8%

Water damage and freezing 18.0% 24.5% 29.0% 19.9% 23.5%

Theft 1.0% 1.0% 1.0% 0.6% 0.7%

All other property damage 4.6% 6.5% 7.1% 7.4% 9.4%

Source: Triple-I

 

Home insurance statistics state by state

The average cost of home insurance in the U.S. is $2,151 per year for $300,000 in dwelling coverage, but the rate you pay could be higher or lower based on your location and other factors.

 

For example, homeowners in Southern states generally pay higher rates due to the increased risk of severe weather. On the other hand, homeowners who live on the West Coast often pay lower rates because weather-related property damage claims are less likely. In the table below, you can see the average home insurance cost in all 50 states and Washington, D.C., based on information Bankrate analyzed from Quadrant Information Services.

 

 

Average annual homeowners insurance premiums by state for 2024

Most expensive states for home insurance

Not surprisingly, homeowners located in parts of the country that experience strong tropical storms, hurricanes and tornadoes commonly face some of the highest property insurance premiums. Based on homeowner insurance statistics, homeowners in Florida pay the highest rates for insurance in the country. In the table below, you can see the most expensive states for home insurance and the average annual premium.

 

State Average annual premium for $300,000 in dwelling coverage

Florida $5,770

Louisiana $5,710

Nebraska $5,121

Oklahoma $4,675

Mississippi $4,289

Least expensive states for home insurance

As one might expect, states that do not experience a high number of damaging weather events typically see more affordable home insurance. Many states have average rates below the national average premium, which is $2,151 per year. The table below highlights the cheapest states for home insurance and the average annual rate.

 

State Average annual premium for $300,000 in dwelling coverage

Vermont $799

New Hampshire $941

Delaware $1,026

Oregon $1,050

New Jersey $1,102

Note that none of these five states have historically experienced catastrophic weather events on a regular basis. However, there are many factors that impact home insurance premiums and conditions that can affect whether a rate will be higher or lower than the national average, even within the same state.

 

Similarly, premiums can vary significantly by ZIP code depending on crime patterns. Not only will your home insurance rates likely increase following a burglary to your own dwelling, but you may also pay higher rates if other homeowners in your neighborhood experience higher than normal rates of property crime.

 

Home insurance industry trends

The home insurance industry continues to evolve significantly under the pressure of economic fluctuations and escalating climate-related risks. Among the most impactful factors are the challenges faced in states like Florida and California, where the risk of natural disasters has led to substantial changes in the insurance landscape.

 

In Florida, a combination of high litigation costs and an increased frequency of severe storms has compelled many insurance companies to withdraw from the state. Heavily impacted by lawsuits, insurance companies like United Insurance Holdings Corp. (UPC), Southern Fidelity and Weston Property & Casualty have pulled out or gone into liquidation. These departures have left homeowners scrambling for coverage amid skyrocketing premiums​.

 

In California, similar challenges are emerging, largely due to the state’s severe wildfire risk. In recent years, heightened wildfire activity and rising construction costs have pushed major insurers like State Farm, Allstate and Farmers to limit new homeowner policies. The situation is exacerbated by Proposition 103, which restricts how much insurers can raise rates, further complicating their ability to adjust to increasing risks.

 

Despite the retreat of some insurers from high-risk states, new companies have stepped in to fill the void. In Florida, recent approvals for six new companies to take on policies from the state-run Citizens Insurance indicate a dynamic shift, suggesting that while the market faces difficulties, it also offers opportunities for new entrants​​. Meanwhile, in California, adjustments are being considered to allow insurers to use modern wildfire risk models to set rates, which could entice insurers to return or expand their offerings in the state.

 

The challenges in the home insurance markets of California and Florida are indicative of broader trends that could reshape the national landscape of property insurance. As major insurers recalibrate their strategies to manage risks associated with climate change and regulatory environments, other states could experience similar shifts. This could lead to an increase in market volatility, with potential spikes in premiums and shifts in policy availability across the U.S.

 

Additionally, the responses from state governments and insurers in California and Florida could serve as models for other regions facing similar issues, possibly leading to significant changes in national insurance regulation and market practices. As these states navigate their unique challenges, their experiences may well set precedents for how insurers and policymakers nationwide approach the growing risks associated with natural disasters and economic shifts in the home insurance sector.

 

Average homeowners insurance cost by company

Although home insurance premiums are largely based on personal factors, rates will also depend on your home insurance company. Average rate data show that some home insurance providers have lower rates than other insurers. This is why it’s important to get quotes from multiple companies before choosing a provider. Below, you can see the average cost of home insurance from some of the biggest and most reputable carriers in the industry.

 

Insurance company Avg. annual premium

State Farm $1,774

Allstate $2,326

USAA $1,442

Farmers $2,525

Travelers $2,092

American Family $1,662

Nationwide $1,813

Chubb $3,578

Erie Insurance $1,633

Auto-Owners $1,410

Of course, the actual premiums for any home insurance policy can vary significantly from these averages based on myriad factors. On the plus side, various discounts may be available depending on individual circumstances and the company you choose.

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