Homeowners Insurance
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Expenditures for Homeowners and Renters Insurance
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CONSUMER PRICES
The Bureau of Labor Statistics collects the prices of a fixed “basket” of consumer goods and services every month to compile the consumer price index. The price of all types of insurance is heavily influenced by the cost of goods and services paid by insurers to meet.
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CONSUMER PRICE INDICES FOR INSURANCE AND
RELATED ITEMS AND ANNUAL RATES OF CHANGE, 1998-2007
(Base: 1982-84=100)
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AVERAGE PREMIUMS FOR HOMEOWNERS AND RENTERS INSURANCE, UNITED STATES,
1999-2005
| - A 2006 Insurance Research Council poll found that 96 percent of homeowners had homeowners insurance while 43 percent of renters had renters insurance.
- 73 percent of homes were underinsured in 2002 compared with 66 percent in 2007, according to Marshall & Swift/Boechk. 18 percent were under-valued in 2007, down from 21 percent in 2006 and 35 percent in 2002.
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AVERAGE PREMIUMS FOR HOMEOWNERS AND RENTERS INSURANCE, BY STATE, 2005
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AVERAGE HOMEOWNERS LOSSES, 2002-2006 (1)
Cause of loss |
Claim frequency (2) |
Claim severity (3) |
| Property damage | | |
| Fire, lightning and debris removal | 0.58 | $19,666 |
| Water damage and freezing | 1.53 | 5,023 |
| Wind and hail | 2.20 | 6,630 |
| Theft | 0.54 | 2,292 |
| All other (4) | 1.08 | 3,147 |
| Liability | | |
| Bodily injury and property damage | 0.14 | 15,507 |
| Medical payments and other | 0.09 | 3,100 |
| Credit card and other (5) | (6) | 755 |
| Average (property damage and liability), 2002-2006 | 6.15 | $6,602 |
(1) For homeowners multiple peril policies. Excludes tenants and condominium owners policies. Weighted average, 2002-2006.
(2) Claims per 100 house years (policies).
(3) Accident year incurred losses, excluding loss adjustment expenses, i.e., indemnity costs per accident year incurred claims.
(4) Includes vandalism and malicious mischief.
(5) Includes coverage for unauthorized use of various cards, forgery, counterfeit money and losses not otherwise classified.
(6) Less than 0.01.
Source: ISO. |
| - In the five period, 2002-2006, 6.2 percent of insured homes had a claim. Wind and hail accounted for the largest share of claims at 2.2 percent of all insured homes.
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THE TOP TEN MOST EXPENSIVE AND LEAST EXPENSIVE
STATES FOR HOMEOWNERS INSURANCE, 2005
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TOP TEN WRITERS OF HOMEOWNERS INSURANCE
BY DIRECT PREMIUMS WRITTEN, 2007
($000)
Rank |
Group |
Direct premiums written (1) |
Market share |
| 1 | State Farm Group | $14,057,358 | 22.1% |
| 2 | Allstate Insurance Group | 7,189,668 | 11.3 |
| 3 | Zurich Insurance Group | 4,474,143 | 7.0 |
| 4 | Nationwide Corp. Group | 2,882,513 | 4.5 |
| 5 | Travelers Group | 2,821,286 | 4.4 |
| 6 | United Services Automobile Association Group | 2,655,818 | 4.2 |
| 7 | Liberty Mutual Insurance Group | 2,228,632 | 3.5 |
| 8 | Chubb & Son Group | 1,837,298 | 2.9 |
| 9 | American Family Insurance Group | 1,426,050 | 2.2 |
| 10 | Hartford Fire & Casualty Group | 1,114,707 | 1.8 |
| (1) Before reinsurance transactions, excluding state funds.
Source: National Association of Insurance Commissioners (NAIC) Annual Statement Database, via Highline Data, LLC. Copyrighted information. No portion of this work may be copied or redistributed without the express written permission of Highline Data, LLC. |
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WHERE THE PREMIUM DOLLAR GOES, HOMEOWNERS INSURANCE, 2006
| - In 2006 claims accounted for $58 of every $100 of homeowners insurance premiums earned, down from $75 in 2005.
- Expenses—including commissions, general overhead expenses, state premium taxes, licenses and fees—accounted for $31 of every $100 of premium earned
- Property damage and theft claims accounted for 81 percent of all claims payments. Liability claims accounted for 5 percent. The cost of settling these claims accounted for the remaining 14 percent of total claim costs.
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CAUSES OF HOMEOWNERS INSURANCE LOSSES
In 2006 about 5 percent of insured homes had a claim, according to ISO. About 95 percent of those claims were for property damage, including theft. Changes in the percentage of each type of homeowners loss from one year to another are partially influenced by large fluctuations in the number and severity of weather-related events such as hurricanes and winter storms. There are two ways of looking at losses: by the average number of claims filed per 100 policies (frequency) and by the average amount paid for each claim (severity). The loss category “water damage and freezing” includes damage caused by mold, if covered. Every state except Arkansas, New York, North Carolina and Virginia has adopted an ISO mold limitation for homeowners insurance coverage, which allows insurers to exclude the coverage unless the condition results from a covered peril.
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HOMEOWNERS INSURANCE LOSSES BY CAUSE, 2002-2006 (1)
(Percent of losses incurred)
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HOMEOWNERS INSURANCE LOSSES, 2002-2006 (1)
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Total homeowner losses |
Year |
Claim frequency (2) |
Claim severity (3) |
| 2002 | 6.79 | $4,671 |
| 2003 | 7.00 | 5,342 |
| 2004 | 6.51 | 8,028 |
| 2005 | 5.52 | 8,379 |
| 2006 | 5.09 | 6,901 |
| Average (4) | 6.15 | 6,602 |
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(1) For homeowners multiple peril policies. Excludes tenants and condominium policies.
(2) Claims per 100 house years (policies).
(3) Average amount paid per claim; based on accident year incurred losses, excluding loss adjustment expenses, i.e., indemnity costs per accident year incurred claims.
(4) Weighted average, 2002-2006.
Source: ISO. |
| - Incurred homeowners losses increased by 12.3 percent from $28.4 billion in 2006 to $31.9 billion in 2007 on a direct basis before reinsurance, according to Highline Data.
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