Updated: Apr 11, 2019
Ever wondered what home insurance gets used for? Well, we put together the infoboard below to highlight the most expensive homeowners insurance claims in the United States.
(data source: ISO via III.org).
The good news here is that most people don’t have cause to make a claim on their homeowners insurance in any given year. In 2014, for example, only 5.3 percent of homeowners made claims on their policies, according to the Insurance Information Institute.
To see which claims are most common, it’s wise to look at averages over a period of several years, to correct for events like major storms that can impact claim filing. Between 2011 and 2015, these were the most common events that triggered homeowners insurance claims.
#1: Wind & Hail (35% of Claims)
This is the category hurricane and tornado destruction fall under, so it’s no wonder it comes in first for frequency. Think about it: when major wind events roll into town, they often do a lot of damage –enough that repairs are greater than an insurance deductible, so it makes sense to make a claim on your policy.
But while wind and hail account for more than a third of all homeowners insurance claims, they’re actually not the most expensive, coming in at only $8,313 per claim on average (number four overall). Read down and you’ll see that this makes wind and hail about a fifth as expensive as fire damage (shudder).
~ UTAH FUN FACT ~
A very rare tornado that occurred in Salt Lake City, Utah on August 11, 1999. It was among the most notable tornadoes to hit west of the Great Plains in the 20th century and the second tornado to hit in Utah that resulted in a fatality (the other occurring in 1884).
#2: Water Damage & Freezing (29% of Claims)
When pipes burst or appliances leak, serious damage can result. And it happens fairly often: more than one in four homeowners insurance claims relate to this type of water damage.
In addition to being common, these claims are somewhat expensive, ranking third overall and coming in at about $8,861 on average.
#3: Fire and Lightning Damage (23% of Claims)
While fire and lightning rank only third for frequency, they tend to be the most expensive claims, with a whopping average price tag of $43,983. The good news? Homeowners insurance was originally designed to protect against fires, so coverage for fire claims is easy to find.
The bad news, obviously, is that fires can destroy a lot of property fast (hence the high cost of claims).
#4: Non-Theft Property Damage (7% of claims)
Miscellaneous property damage can take a million forms: a tree falling through your roof, a baseball shattering your window, a trash truck backing into your brand-new garage. Because of the sheer variety here, the average cost of these types of claims isn’t too informative. But for the record, it’s $5,048.
#5: Liability (4% of Claims)
Let’s all be glad liability claims are rare, because they tend to be expensive. As a refresher, liability refers to your duty toward other people. So when a guest is injured or has their property damaged while visiting your home, you may have liability for their medical costs or the costs to repair or replace their property.
Liability claims rank number two in average cost, coming in at $22,100. The good news: most homeowners insurance policies offer liability protection in what’s called Coverage E.
#6: Theft (3% of Claims)
Rounding out the top six most common homeowners insurance claims is theft. Coming in at just three percent of all claims, with an average claim cost of $3,990, theft is the smallest of the big guys, you could say.
If you’d like to reduce your risk of theft even further, consider installing a home security system. Some insurers even offer premium discounts for doing this!
Mitigate Your Risk to Save Your Home & Your Money
Homeowners don’t want bad things to happen to their houses because they’re expensive, sad, and a pain to deal with. Insurance companies also don’t want bad things to happen because bad things cost them money.
That’s why a lot of insurance carriers offer lower premiums for homeowners who mitigate their risk.
Risk mitigation might involve…
Having a smoke alarm with working batteries.
Having a fire extinguisher.
Living near a fire department.
Having a home security system.
Having a carbon monoxide detector.
Maintaining plumbing and sprinkler systems.
Avoiding open flames when cooking.
Using electrical outlets as directed.
One important note, though: while safety and security updates are almost always wise, they won’t all lead to an insurance discount. If you’re considering higher-end upgrades with an eye on premium savings, check with your insurer first.
So the next time you are paying your home insurance premium, remember that it has many uses – including covering you for some things that you might not expect, such as medical payments and even credit card fraud.
Have you ever had to file a homeowners insurance claim? If so, please let us know about it in the comments!