Jeffrey Wade
Homeowner's insurance is an important consideration for anyone owning property, and in the US, nearly 90% of the estimated 80 million homeowners have some form of insurance. This amounts to over 246 million homeowner insurance policies, with an average premium of over $1000 per year, or $109 per month. The most popular type of insurance is the HO-3 policy, which was held by 78% of homeowners in 2021. However, 60% of insured households are underinsured, meaning they may not be covered for certain losses.
| Characteristics | Values |
|---|---|
| Number of homeowners in the US | 80 million |
| Percentage of homeowners with insurance | 95% |
| Average cost of insurance | $109 per month |
| Percentage of insured homeowners that are underinsured | 60% |
| Percentage of insured homes that made a claim in 2022 | 5.5% |
| Average claim amount | $12,474 |
| Average property damage claim payout from 2018 to 2022 | $15,747 |
| Average premium increase in 2021 | 7.6% |
| Number of homeowners without insurance | 6.1 million |
| Percentage of homeowners without insurance | 7.4% |
| Percentage of Native American homeowners without insurance | 22% |
| Percentage of Hispanic homeowners without insurance | 14% |
| Percentage of Black homeowners without insurance | 11% |
| Percentage of lower-income homeowners without insurance | 15% |
| Number of insurance policies | 246 million |
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What You'll Learn
Homeowner insurance statistics
Homeowner's insurance statistics provide insight into the prevalence and characteristics of home insurance policies in the United States. Here are some key statistics to consider:
Prevalence of Homeowner's Insurance
According to various sources, the majority of homeowners in the United States have homeowner's insurance. While one source estimates that 95% of homeowners have some form of insurance, another source suggests a slightly lower estimate of 88%. This translates to approximately 80 million homeowners with insurance out of a total of about 84 million homeowners in the country. However, it is important to note that there are still over 6 million homeowners in the US who lack insurance coverage.
Insurance Providers and Premiums
The homeowner's insurance market is led by a few prominent companies. In 2023, State Farm held the largest market share, writing $27 billion in direct premiums and capturing 18% of the market. Allstate and Liberty Mutual followed with $13.6 billion and $10.5 billion in direct premiums, respectively. Together with USAA and Farmers Insurance, these companies form the top five providers in the country. The average cost of homeowner's insurance is estimated to be around $109 per month, or $2,304 per year for $300,000 in dwelling coverage.
Types of Policies
The most common type of homeowner's insurance policy is the HO-3 policy, which accounted for 78% of owner-occupied policies in 2021. HO-3 policies provide comprehensive coverage at a typically affordable price. The next most common policy is the HO-5, making up 13% of policies, which offers broader coverage but tends to be more expensive. Other policy types include HO-2 (7%), HO-1 (2%), and HO-4/HO-6 (with 75% of policyholders choosing HO-4).
Claims and Losses
The frequency of insurance claims among insured homes varies, with estimates ranging from 5% to 5.3% of insured homes filing claims in a given year. The average claim amount can be substantial, with figures ranging from $12,474 to $18,311. Property damage, including theft, is the most common reason for claims, accounting for 97.8% of claims in 2022. Wind and hail-related damage are the most frequent causes, followed by water damage and freezing, which accounted for 29.4% of losses in 2019. Fire and lightning damage tend to result in the most expensive claims, with an average claim amount of $83,991.
Underinsurance and Risk Factors
Despite the high adoption rate of homeowner's insurance, it is estimated that 60% of insured households are underinsured on their policies. This means that they may not have sufficient coverage for certain losses. Additionally, certain demographics of homeowners are disproportionately at risk of lacking insurance altogether. This includes Native American, Hispanic, and Black homeowners, with higher percentages of these groups going without insurance. Lower-income homeowners are also twice as likely to lack insurance coverage compared to the general homeowner population.
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Cost of insurance
The cost of homeowners insurance in the US is influenced by several factors, and it is rising. On average, homeowners insurance premiums per policy increased 8.7% faster than the rate of inflation from 2018 to 2022. Some consumers faced substantially larger premium increases than the national average.
One of the main factors influencing the rise in insurance costs is the impact of climate-related events. The National Oceanic and Atmospheric Administration reported that from 2018 to 2022, 84 billion-dollar disasters (excluding floods) cost over $609 billion, and these costs have continued to rise. The increased frequency and severity of weather-related events such as hurricanes and winter storms have led to higher insurance claims and losses for insurers, who pass on these costs to consumers. As a result, homeowners in communities affected by substantial weather events are paying far more for insurance than those in lower-risk areas.
Another factor influencing insurance costs is the condition and age of the home. Insurance companies typically charge more for older homes with older roofs, as they are more susceptible to windstorms, hail damage, and other types of damage. Homes with special features, such as antique woodwork or marble tile, may also have higher insurance costs due to the higher replacement value of these items. On the other hand, homes with roofs and exterior walls constructed of materials with higher fire ratings or wind resistance may qualify for insurance discounts.
The location of the home also plays a role in determining insurance costs. Homes that are closer to a fire station may have lower insurance premiums, while those in neighbourhoods with higher crime rates or a higher risk of natural disasters may have higher premiums. Additionally, the availability of insurance in certain areas may be declining due to the increased frequency of climate-related events, making it harder for homeowners in these areas to find affordable coverage.
The deductible is another factor that affects insurance costs. Generally, a higher deductible results in a lower insurance rate, as the homeowner is taking on more of the risk. However, a higher deductible can lead to higher out-of-pocket expenses in the event of a claim, so it is important to choose a deductible that is comfortably payable.
Credit history and previous insurance claims can also impact insurance costs. Homeowners with poor credit or a history of insurance claims may be considered higher-risk and may be charged higher premiums. Improving credit scores and maintaining a claims-free record can help lower insurance costs over time.
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Most common insurance providers
Homeowners' insurance is designed to cover unexpected losses and damages to your property. Some policies may also provide up to $500 for unauthorized credit card use. According to the Insurance Information Institute (III), natural disaster-related losses have increased more than tenfold since the 1980s, directly contributing to rising rates nationwide. Climate change is one of many factors contributing to rate hikes and canceled policies in vulnerable areas.
The largest home insurance providers in the US include:
- State Farm: The biggest home insurer, accounting for almost a fifth of the nation's $133 billion home insurance market. It offers home insurance in 48 states and Washington, D.C.
- USAA: Available in all 50 states and Washington, D.C., USAA caters to the military community, offering special discounts and coverage options like military discounts and coverage for lost or stolen uniforms.
- Amica: Available in all states except Alaska, Hawaii, and Washington, D.C., Amica is known for its affordability and high customer satisfaction. It offers various discounts, including a new/remodeled home credit and an early shopper discount.
- Erie Insurance Group: Offering the lowest premium among the companies rated by CR at $1,153, well below the national median.
- NJM: Along with Erie Insurance Group and USAA, NJM reached the second-highest tier in CR's ratings.
Other popular companies include Progressive, Travelers, Allstate, American Family, Farmers, Liberty Mutual, and Nationwide.
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Demographics of uninsured homeowners
While nearly 90% of homes in the United States are insured, this still leaves about 6 million homeowners without insurance. This equates to about 7.4% of all properties in the country, or 1 in 13 homeowners.
There are several factors that contribute to the demographics of uninsured homeowners in the US. Firstly, income plays a significant role. Homeowners earning less than $50,000 per year are twice as likely to lack insurance compared to homeowners with higher incomes. Among lower-income homeowners, 15% are without coverage.
Secondly, race and ethnicity are also factors. Certain racial and ethnic demographics of homeowners are disproportionately at risk of being uninsured. For example, 22% of Native American homeowners, 14% of Hispanic homeowners, and 11% of Black homeowners have no insurance. This contributes to the racial wealth gap, as uninsurance disproportionately impacts these communities.
Thirdly, location is a factor. The share of uninsured homeowners is highest in the South, with 15.7% of homeowners lacking insurance or being underinsured. Within the South, under-insurance rates are higher in counties with majority-minority populations. For example, 22% of homeowners in majority Native American and Native Alaskan counties and 14% in majority-Black counties are uninsured. Additionally, rural homeowners, particularly those in the metropolitan areas of Houston and Miami, and those in Mississippi, New Mexico, and Louisiana, are more likely to be uninsured.
Finally, the type of home ownership also plays a role. 35% of owners of manufactured homes and 29% of homeowners who inherited their homes are without insurance.
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Risks of being uninsured
While it is not federally mandated for homeowners to have insurance in the US, it is still crucial to have one to protect yourself from financial risks. According to the US Census Bureau's 2023 American Community Survey, one in eight homeowners, or about 13.4% of homeowners, do not have insurance. This equates to roughly 6.1 million homes and $1.6 trillion in property value.
Financial Risk
Homeowners insurance protects you financially in the event of unexpected incidents, such as fires, storms, or natural disasters. Without insurance, you would have to bear the full cost of repairing or rebuilding your home, which could lead to significant financial debt or even homelessness. Natural disasters, such as hurricanes, wildfires, and tornadoes, can cause catastrophic damage, and recovery without insurance is very challenging.
Legal Risk
Homeowners insurance also provides legal protection in certain situations. For example, if someone injures themselves on your property and sues you, your insurance policy would typically cover legal fees and any financial penalties. Without insurance, you would be solely responsible for these costs.
Risk of Losing Mortgage
If you have a mortgage, your lender will likely require you to have homeowners insurance. Failing to maintain insurance on your home could result in foreclosure and the loss of your home.
Risk of Underinsurance
Even among those with insurance, underinsurance is a significant issue. About 60% of insured homeowners are underinsured, meaning they may not be covered for certain types of losses, such as water damage or freezing. This leaves them vulnerable to financial strain if their homes are damaged or destroyed.
In conclusion, while homeowners insurance may be costly, the risks of being uninsured are significant. Homeowners should carefully consider their ability to assume these risks before deciding to go without insurance or underinsure their homes.
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Frequently asked questions
There are over ten home insurance companies in the US, with the top 10 accounting for almost two-thirds (64%) of the overall market.
State Farm is the largest home insurance company in the US, with almost a fifth of the nation's $133 billion home insurance market.
Allstate is the second-largest home insurance company in the US, with 8.92% of the total market share.
USAA is considered the best homeowners insurance company in the US, with high customer satisfaction scores, ample coverage options, and many discounts.
You should consider your needs and budget when choosing a home insurance company. If you value personalized service, look for a company with local agents. If you want easy access to your policy, choose a company with strong digital tools.
