In addition to auto insurance, home insurance is one of the most common insurance protections people obtain for peace of mind and financial safeguards. About 95% of U.S. homeowners have home insurance, according to 2016 data from the Insurance Information Institute (III); that represents about 70 million homes insured. Although there are no legal requirements that compel homeowners to insure their dwellings, most mortgage lenders insist that borrowers insure the homes that are financed. Additionally, in light of the potential loss from a disaster, it is highly recommended by experts to insure your home.
According to 2020 data, the overall average annual premium for homeowners insurance is $1,477 based on a home with a dwelling coverage amount of $250,000. Average homeowners insurance premiums are on the rise, increasing by approximately 3.1% in 2018, following a 1.6% increase in 2017, according to a January 2021 study by the National Association of Insurance Commissioners. On the other hand, the average renters insurance premium fell by 0.6% in 2018. This marked a fourth consecutive annual decline. Renters insurance premiums declined 2.7% in 2017.
Important home insurance claims statistics
Claim statistics tell a compelling story about the importance of home insurance in the United States and highlight the many factors that influence the type and frequency of claims in different parts of the country:
- According to a 2020 III survey, homeowners are taking greater steps to protect and insure their dwellings against natural disasters such as flooding and hurricanes.
- The survey also revealed that consumers can still benefit from a renewed effort to educate homeowners about the types and extent of homeowners insurance that can be purchased.
- In 2018, the III found 5.7% dwellings with home insurance filed a claim. Over 98% of these claims were the result of property damage, as opposed to liability coverage. This included loss from theft.
- The most frequent type of homeowners claims are those caused by wind and hail (34%), followed closely by fire and lightning claims (32%).
- About one in 40 insured homes has a property damage claim related to wind or hail each year. About one in 50 insured homes has a property damage claim caused by water damage or freezing each year.
- Fire and lightning loss costs did decrease by 37% in 2019, according to III findings — a sharp drop from 2018.
- The 2021 average annual homeowners insurance premium for a $250,000 dwelling was $1,312.
- A study by J.D. Power indicates approximately 65% of homeowners choose to save on premiums by taking advantage of carrier discounts for bundling their home insurance with another policy or policies, such as car insurance.
Home insurance claims statistics 2021
The costs for all peril loss for 2019 decreased by 13% compared to the prior year, according to the 2020 LexisNexis® Home Trends Report. This result halted a two year trend of higher than typical all peril loss.
In particular, the Home Trends Report noted that catastrophic losses stemming from wind, fire and lightning fell 32% in 2019 from the prior year. While severe wildfires, hurricanes, hailstorms and flooding did hit some states with devastating consequences in 2019, the severity and frequency of those events were lower across all perils than in 2017 and 2018.
The severity of weather-related water events, however, increased in 2019. The year ranked as the second wettest on record. 90% of all catastrophe losses occurring in 2019 were the result of wind and hail perils, which often correlate to water damages.
The table below — based on III statistics — highlights the primary causes of property damage claims filed during the analyzed years from 2014 to 2018:
|Cause of property loss||2014 Percentages||2015 Percentages||2016 Percentages||2017 Percentages||2018 Percentages|
|Wind and hail||28.8||21.1||32.8||41.7||34.4|
|Fire and lightning||24.6||22.2||25.9||32.8||32.7|
|Water damage and freezing||33.6||45.8||30.5||18.4||23.8|
|All other property damage||6.7||5.6||5.4||4.1||6.2|
Although trend lines above are not completely smooth, it is clear that over the five year period reviewed, both wind and hail and fire and lightning claims have become more frequent events for insurers. This tracks with the increased overall damage from major tornadoes, hurricanes and forest fires over the past years. This phenomenon is not necessarily related to an increase in the frequency of these events. The most significant reason for increasing loss is attributed by the III to population growth from more development in storm prone areas.
The decreasing percentage of theft claims tracks the long term national trend of decrease in theft crimes.
Home insurance statistics state by state
The National Association of Insurance Commissioners (NAIC) indicates states saw growth in the first half of 2020 in the direct premiums written (DPW) for home insurance compared to the first half of 2019. There were a number of states reporting noticeable declines in DPW however. For example, New York (-1.0%), Illinois (-1.1%) and New Jersey (-1.1%) were the largest states reporting declines in DPW. The other states with declining DPW were Hawaii (-0.4%), North Dakota (-0.6%), Delaware (-0.7%), Vermont (-1.4%), and West Virginia (-3.3%).
All other states reported increases in DPW for this period. The leading states in this regard were Idaho (+7.0%), Arkansas (+5.9%), Iowa (+5.3%), and Florida (+5.1%).
Average annual homeowners insurance premiums by state for 2021:
|State||Average annual premium|
Most expensive states for home insurance
Not surprisingly, homeowners located in parts of the country more susceptible to violent storms and tornadoes commonly face some of the highest home insurance premiums. Home insurance for dwellings located in parts of eastern Colorado, Kansas, Nebraska, Oklahoma, South Dakota and northern and western Texas frequently costs more than policies written in the rest of the country and well above the national average annual home insurance premium of $1,312. These areas are referred to as “Tornado Alley.”
|State||Average annual premium|
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. However, other factors are at play as well.
For example, Hawaii has the lowest average annual home insurance premium in the nation at $376. While Hawaii does not experience the level of hurricane activity seen in the southeast, weather would not affect rates regardless. By law, Hawaii’s home insurance policies do not cover hurricanes and rates reflect this risk elimination. Many residents, however, are forced to purchase separate hurricane policies. Here are the states where you might see the lowest home insurance premiums:
|State||Average annual premium|
Note that none of these five states experience significant repetitive weather events.
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. For example, home insurance premiums along the coast of South Carolina can be significantly higher than premiums for policies written on dwellings located only miles inland. Hurricane risk would be the primary factor in this example.
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 others in your neighborhood experience higher than normal rates of property crime.
Home insurance industry statistics
The overall property and casualty insurance industry achieved a net profit of $27 billion (NAIC) during the first half of 2020. This was a 23% decline from 2019 and it is believed that most of this decline arose from lower investment returns due to the global decline in financial markets caused by the COVID-19 pandemic.
The total direct premiums written for multi-peril home insurance in 2019 was $103,995,754,245. In that year, six insurance companies represented almost 50% of the total U.S. market, which includes all states in the country, U.S. territories and Canada. State Farm, with both the largest market share and highest earned premium for home insurance in excess of $18 billion, showed 2019 gross direct loss (DL) to earned premium (EP) ratio of 58.75. All six companies had a DL/EP less than 60.0. Farmers had the most favorable ratio at 38.72.
Though there are many factors that go into the determination of overall profitability, a loss ratio can offer useful information about an insurance company’s financial health. A ratio over 100.0 means that the company is paying out more in claims than it brings in with premiums. This is a potential indicator of poor financial health. On the other hand, a ratio below 60 is typically viewed as a positive indicator and certainly financial prospects improve as this number decreases.
|Company||Market Share %||Cumulative Market Share %||Direct Premiums Earned*||DL/EP Ratio|
|State Farm||17.97||17.97||$18.5 billion||58.75|
|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 nearest $100 million.
Average homeowners insurance cost by company
Here are some average annual premiums charged by leading U.S. home insurance companies (by market share) for a policy insuring a $250,000 dwelling:
Of course, the actual premiums for any home insurance policy can vary significantly from these averages based upon all of the factors discussed above. Additionally, everyone looking for home insurance coverage should understand all of these factors and the various discounts that may be available based upon individual circumstances.
Bankrate utilizes Quadrant Information Services to analyze 2021 rates for all ZIP codes and carriers in all 50 states and Washington, D.C. Quoted rates are based on 40-year-old male and female homeowners with a clean claim history, good credit and the following coverage limits:
- Coverage A, Dwelling: $250,000
- Coverage B, Other Structures: $25,000
- Coverage C, Personal Property: $125,000
- Coverage D, Loss of Use: $50,000
- Coverage E, Liability: $300,000
- Coverage F, Medical Payments: $1,000
The homeowners also have a $1,000 deductible and a separate wind and hail deductible (if required).
These are sample rates and should be used for comparative purposes only. Your quotes will differ.