Learning From Homeowners Insurance Statistics

Learning From Homeowners Insurance Statistics
In Florida, hurricane season is reason enough to invest in a quality homeowners insurance policy. But, in fact, there are many other good reasons to buy homeowners insurance as well.
Both dangers to your home and liability concerns contribute to the motivation for buying a homeowner’s policy. And when you examine some of the most relevant statistics related to homeowner’s coverage, the big picture as to why and what you should insure begins to emerge.

Examining Some Relevant Homeowners Insurance Statistics
Each year, around 5% of insured homes have a claim filed on them. That’s 1 in 20. Consider this: if you own a policy for 20 or more years, you are likely to file at least one or two claims and even one claim could be catastrophic and beyond your ability to pay out of pocket.

Also, realize that 97% of claims (in 2016) on homeowners insurance policies are for property damage, while only 3% are for liability coverage.

Breaking it down, in 2016, claims were caused by wind/hail 33% of the time, by water damage/freezing 30% of the time, and by fire/lightning in 27% of cases. Only 2% of claims were based on thefts and 2.7% of claims based on bodily injury liability.

In regard to claim severity, fire damage averaged the highest cost per claim at $10,440 in 2016 while the second-highest was bodily injury liability at $23,010 per claim. Thus, while liability makes up only a small percentage of claims based on frequency, it accounts for a much larger share of the claims based on actual cost.

Florida, Texas, Oklahoma, and Louisiana have the highest annual homeowners insurance rates among US states. This clearly reflects the higher risk of hurricanes and tornadoes in those states. Also, note that the premiums on homeowners policies have been climbing by 3% per year in recent years.

Finally, note that only 52% of homeowners insurance policy holders made an itemized inventory list of their home’s contents for use in case of an insurance claim.

What Can We Learn From These Statistics?
Statistics are not meant to be just a random collection of numbers or even simply to satisfy our curiosity. They are worth examining because they are useful.

Here are some takeaways from the homeowners insurance stats we just looked at above:

  • You will likely file one or more claims on your policy if you keep your homeowners insurance for 20 or more years. It’s not worth the risk of going without insurance over the long term.
  • Property damage is the most significant danger to homeowners. Fire and weather events are the two top risks to your building that are covered by homeowners insurance. This should be the focus of every homeowners policy.
  • While a liability claim is much less likely to occur, if it does occur, it can be very costly. So it’s worth buying significant liability coverage for a reasonable rate.
  • While homeowners premiums are high in Florida, prices tend to go up with time. So it’s best to buy early and lock in a lower rate.
  • Property damage to your home’s contents can add up to thousands of dollars per claim. Don’t make the mistake of not writing up an inventory list ahead of time to ensure maximum reimbursement.

To learn more on the benefits of and need for homeowners insurance, or for a free quote, contact Flagler County Insurance Agency today!