In this article:
- The Most Common Causes of Homeowners Insurance Claims
- How Do I Know if I Have Enough Coverage?
- How to Shop for Homeowners Coverage
Nearly half of all homeowners insurance claims are due to wind and hail—45.5% in 2020—but a variety of other problems also cause frequent homeowners claims. These include fire, water damage, theft, bodily injury, medical payments and more.
The average home insurance claim payout was $13,955 in 2020. While homeowners can expect their policies to cover these high costs, it is important to be aware of the kind of damage that may occur.
The Most Common Causes of Homeowners Insurance Claims
A variety of natural phenomena and accidents are responsible for the majority of homeowners insurance claims. But filing a claim at all is rare. Only 6% of insured homes in 2020 filed a claim. Still, knowing what kinds of problems may arise helps homeowners prepare financially, emotionally and physically for these events.
The Insurance Information Institute (III) tracks homeowners insurance claims and their cost. The following III statistics express the percentage of claims by incident type in 2020 and average costs from 2016 to 2020.
1. Wind and Hail
As the most frequent causes of filed homeowners insurance claims, wind and hail account for 45.5% of claims. This amounts to about 1 in 35 homes.
The average cost of claims related to wind and hail was $11,695. Wind and hail can result in fallen trees, broken windows, broken siding and other damage to homes.
2. Fire and Lightning
Though they only account for 23.8% of home insurance claims, fire and lightning claims are the most expensive, costing an average of $77,340 per claim.
The incidents of lightning strikes and wildfires leading to claims are relatively rare, however, with only 1 in 385 homes filing claims for such an event each year.
3. Water Damage and Freezing
Accounting for 19.9% of home insurance claims, water damage and freezing can cause expensive, extensive damage to homes. About 1 in 60 homes will face a water damage or freezing event that leads to an insurance claim each year.
Burst pipes and leaking roofs can rack up a hefty bill for homeowners, with insurance payouts averaging $11,650.
4. Other Causes
Other miscellaneous property damage and claims related to financial incidents account for a good amount of homeowners insurance claims. Other property damage is 7.9% of claims and credit card and other claims account for less than 0.1%.
These varied incidents can result in a range of costs. The III reports an average loss of $6,773 in this more nebulous category. Credit card issues and related incidents result in an average loss of $820.
5. Bodily Injury and Property Damage
Bodily injury and property damage claims for injuries or damage to others that you are responsible for has the second-highest claim costs: Losses average $30,324.
But these incidents are unusual when it comes to filing a claim, with only 1 in 1,425 homes filing liability claims. They account for just 2% of claims for homeowners insurance.
6. Theft
Coming home to find your house burglarized is many homeowners' worst nightmare. But it's somewhat unlikely to result in an insurance claim, with only 1 in 525 homes having a theft-related claim each year. These incidents account for 0.6% of home claims and usually result in an average loss of $4,415.
7. Medical Payment
If an accidental injury to a visitor occurs on your property, the prospect of paying for medical bills may be scary. Though these incidents are rare—only resulting in 0.3% of homeowners insurance claims—they can come with a hefty bill averaging $7,147.
How Do I Know if I Have Enough Coverage?
Knowing whether you have enough homeowners insurance coverage is important, and can help you feel prepared if an event requires you to file a claim.
Homeowners insurance needs to cover rebuilding costs as well as the cost to replace personal belongings that are lost or damaged. It should also be enough to protect you in the case of a liability lawsuit.
Your insurance company will provide their estimated replacement cost should your home need to be rebuilt, but you can get a ballpark idea on your own too. To get a basic estimate of replacement cost, find out local building costs per square foot and multiply that number by your home's square footage. You can research local construction costs by contacting estate agents, builders or insurance companies in your area. Additional details can affect replacement cost, such as roofing and siding materials, the number of bedrooms and bathrooms, and other factors, but this basic calculation can give you a rough idea of the amount of coverage you'll need.
If you are concerned about the amount of coverage you have, you can modify your plan with add-on policies. Some examples of homeowners insurance extras include:
- Extra dwelling coverage: This includes things like inflation coverage to make sure you can afford to rebuild even if material and labor prices go up.
- Extra personal property coverage: This can help you get replacement cost coverage for belongings, rather than your items' current cash value.
- Extra alternative living expenses: This provides extra money for temporary living space if your home is damaged.
- Extra liability coverage: This includes policy extras like umbrella insurance that help to protect your assets. They have a higher coverage level than ordinary home insurance in the event of a liability lawsuit.
How to Shop for Homeowners Coverage
If you're getting ready to shop for homeowners coverage, make sure to follow these steps for a streamlined process:
- Calculate your needed amount of coverage and the cost of any extra add-on policies.
- Get quotes from multiple companies to compare coverage and cost.
- Pursue cost-saving practices such as:
- Bundling policies
- Getting discounts
- Increasing your deductible
If you want to make sure your homeowners insurance offers the best coverage for potential future claims, have Gabi®—a part of Experian—do price and coverage comparisons. Gabi can provide apples-to-apples price and coverage comparisons to your current home policy from over 40 of the top providers so you'll know if you're getting the best deal.
