Category Archives: Homeowners Insurance

Home Fire Drill

My older son has a fire safety drill at school today and my younger son’s class field trip to the firehouse is next week, which is my personal reminder that it’s time to test our home smoke alarms.

In fact smoke alarms are once again the theme of this year’s National Fire Prevention Week,  and there are good reasons why.

National Fire Protection Association (NFPA) statistics show that three of every five residential fire deaths in the United States result from fires in homes with no smoke alarms or no working smoke alarms.

And almost 40 percent of fire fatalities that occur in the U.S. are in homes with no smoke alarms.

Being prepared in the event of a home fire is also critical.

Despite the fact that nine in 10 structure fires occur in the home, a recent survey by Nationwide found that only one in five parents regularly practice fire escape plans at home.

Nearly half of all parents surveyed (45 percent) also report that their children do not know what to do in the event of a home fire.

To raise awareness of this issue and encourage families to be more prepared, tomorrow Nationwide is launching Home Fire Drill Day as part of its Make Safe Happen program.

What can you do?

First, know where to go. Pick a safety spot that’s near your home and a safe distance away. Explain to your kids that when the smoke alarm beeps they need to get out of the house quickly and meet at that safety spot.

Test your smoke alarms with your kids so they know what they sound like. Then, do the drill and see if you can all make it out of the house to the safety spot in under two minutes. If not, do it again.

As Nationwide says: “We do fire drills at school. We do them at work. Now, let’s do them at home.”

Sounds like a plan.

The Insurance Information Institute has facts and statistics on fire losses here.

Brushing up on Terrorism Insurance

Multiple explosions over the weekend in New York and New Jersey as well as a knife attack by an individual at a mall in Minnesota come amid heightened concerns of terrorist attacks 15 years after 9/11.

Some 29 people were injured in the blast Saturday night in New York City’s Chelsea neighborhood, which is also reported to have caused significant property damage. Meanwhile, nine were injured in the Minnesota mall attack, where the suspect was killed by police.

Monday morning another explosion was reported near Elizabeth train station in New Jersey, where up to 5 devices were found, and as the FBI investigation intensified and security tightened around major transportation hubs, law enforcement officials arrested a suspect in the NY/NJ blasts.

While the unfolding events are unsettling, it’s good to know that if the home you own were damaged by an explosion and fire, personal insurance policies have you covered.

Standard homeowners insurance policies cover the homeowner for damage to property and personal possessions due to explosion, fire and smoke—the likely causes of damage in a terrorist attack, according to the Insurance Information Institute (I.I.I.), even if terrorism is not specifically referenced in the insurance policy.

Condominium or co-op owner policies also provide coverage for damage to personal possessions resulting from acts of terrorism, while damage to common areas of a building like the roof, basement, elevator, boiler and walkways would be covered providing the condo/co-op board has purchased terrorism coverage.

Standard renters insurance policies also include coverage for damage to personal possessions due to a terrorist attack. Again, coverage for the apartment complex itself must be purchased by the property owner or landlord.

If your car is damaged or destroyed in an explosion your auto insurance policy will cover the damage if you have purchased “comprehensive” coverage.

Commercial insurers are required to offer coverage against terrorist attacks and many owners of commercial property, such as office buildings, factories, shopping malls and apartment buildings,  have purchased the coverage.

Marsh estimates some 60 percent of U.S. businesses have purchased terrorism insurance, up from 27 percent in 2003.

However, losses are only covered by a commercial terrorism insurance policy if the government officially certifies an attack as an act of terrorism. Several criteria must be met for the certification to be made. If property/casualty losses do not exceed $5 million in the aggregate, the act will not be certified as an act of terrorism.

Acts of terrorism are excluded from most standard business insurance policies.

Workers compensation—a compulsory line of insurance for all businesses—covers employees injured or killed on the job and therefore automatically includes coverage for acts of terrorism.

Check out I.I.I. facts and statistics on terrorism.

Wildfire Smoke Travels

Two wildfires in California prompted officials to issue air pollution warnings almost 200 miles away in Nevada this week, reminding us that wildfire exposure reaches far beyond the flames.

The Soberanes fire which is located in the Monterey County area is currently 23,688 acres in size and is 10 percent contained. The Sand Fire, which began on July 22, quickly grew to more than 30,000 acres and is now 38,346 acres in size and 40 percent contained.

In the first six months of 2016 there were 26,510 wildfires across the United States, compared to 29,078 wildfires in the first half of 2015, according to statistics from the National Interagency Fire Center, as reported by the Insurance Information Institute (I.I.I.).

Over the 20-year period 1995 to 2014, fires—including wildfires—accounted for 1.5 percent of insured catastrophe losses in the United States, totaling about $6 billion, according to the Property Claims Services (PCS) unit of ISO.

Smoke, soot and ash produced by large wildfires present a risk to property and life in the fire zone, not to mention a potential health risk to residents living in the path of the smoke.

It’s important to recognize that even if a property doesn’t suffer direct damage from flames in a wildfire, it may be exposed to extensive smoke, soot and ash damage.

From the insurance perspective, damage caused by fire and smoke are covered under standard homeowners, renters and business owners policies and under the comprehensive portion of an auto insurance policy.

However, it’s important to notify your agent or insurer of this damage on a timely and proper basis.

Water losses or other damage caused by fire fighters while extinguishing a fire is also covered under these policies.

Here’s a visual of the smoke from the California wildfires, courtesy of NOAA and Weather Underground:

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Check out I.I.I. claims filing tips here.

Lightning Strikes, Insurance Responds

Next time you’re home when a heavy thunderstorm rolls in, take a moment to think about how damaging lightning losses can be and how insurance helps.

In fact, insurers paid out $790 million in lightning claims last year to nearly 100,000 policyholders, according to a new analysis by the Insurance Information Institute (I.I.I.) and State Farm.

Damage caused by lightning, such as fire, is covered by standard homeowners policies and some policies provide coverage for power surges that are the direct result of a lightning strike.

As James Lynch, vice president of information services and chief actuary of the I.I.I. says:

“Not only does lightning result in deadly home fires, it can cause severe damage to appliances, electronics, computers and equipment, phone systems, electrical fixtures and the electrical foundation of a home.”

It’s due partly to the enormous increase in the number and value of consumer electronics that the average cost per claim has continued to rise, Lynch explains.

There were 99,423 insurer-paid lightning claims in 2015, down 0.4 percent from 2014, but the average lightning claim paid was 7.4 percent more than a year ago: $7,497 in 2015 vs. $7,400 a year earlier.

The average cost per claim rose 64 percent from 2010 to 2015. By comparison, the Consumer Price Index (an inflationary indicator that measures the change in the cost of a fixed basket of products and services, including housing, electricity, food, and transportation) rose by 9 percent in the same period.

In recognition of Lightning Safety Awareness Week (June 19-25), the I.I.I. and the Lightning Protection Institute (LPI) encourage homeowners to install a lightning protection system in their homes. These systems are designed to protect the structure of your home and provide a specified path to harness and safely ground the super-charged current of the lightning bolt.

The growing market for smart home technology makes installing a lightning protection system even more important, noted the I.I.I. It is also an opportunity for designers, builders and code officials to include lightning protection systems in their plans.

Kimberly Loehr, director of communications for the LPI adds:

“Just as smart homes provide the ultimate in safety and comfort, lightning protection systems ensure that state-of-the-art home automation systems aren’t damaged by direct or nearby lightning strikes.”

Fido Takes A Bite Out of Homeowners Claims

Don’t bite on this, but next week’s National Dog Bite Prevention Week is a reminder that Fido can cost dog owners—and their insurers—dearly.

Dog bite (and dog-related injuries) accounted for more than one-third of all homeowners insurance liability claim dollars paid out in 2015, costing in excess of $570 million, according to the Insurance Information Institute (I.I.I.) and insurer State Farm.

In its analysis, the I.I.I. found that while the number of dog bite claims nationwide decreased 7.2 percent in 2015, the average cost per claim for the year was up 16 percent.

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The average cost paid out for dog bite claims nationwide was $37,214 in 2015, compared with $32,072 in 2014 and $27,862 in 2013.

In fact, the average cost per claim nationally has risen more than 94 percent since 2003.

Why is this?

Loretta Worters, vice president at the I.I.I., says increased medical costs as well as the size of settlements, judgments and jury awards given to plaintiffs, which are still on the upswing, are responsible for the higher costs per claim.

Dog-related injuries also have an impact on the potential severity of losses. In addition to bites, dogs knock down children, cyclists, the elderly, all of which can result in fractures and other blunt force trauma injuries.

Another factor might be the surge in U.S. Post Office worker attacks, many of which take place at the customer’s door.

The study found the average cost per claim varies substantially across the country.

While Arizona had only the ninth largest number of claims at 393, it registered the highest average cost per claim of the 10 states with the most claims: a staggering $56,654.

State Farm notes that insurance is an important aspect to being a responsible dog owner and offers this important advice:

“When renting a property make sure to have rental insurance because most landlords do not provide coverage should there be a dog bite incident. If you are a homeowner, talk to your insurance agent about what is covered under a standard homeowner policy related to dogs.”

More on this story over at


Industry Well-Prepared to Weather Hail Damage

Hail claims are making headlines following multiple springtime hailstorms in Texas, including one in the San Antonio region that is expected to be the largest hailstorm in Texas history.

While the estimated insured losses from the storms—$1.3 billion and climbing from two storms that hit the Dallas-Fort Worth region in March; as yet not estimated (but expected to be worse) insured losses from a third storm in the Dallas-Fort Worth region April 11; plus a further $1.36 billion early estimate of insured losses from the San Antonio storm April 12—may seem high, property insurers are well-prepared to handle such events.

In a new briefing, ratings agency A.M. Best says it expects limited rating actions to result as affected property/casualty insurers are expected to maintain sufficient overall risk-adjusted capitalization relative to their existing financial strength ratings.

Which insurers will be most affected?

A.M. Best explains that for property insurers, in particular in property lines of business, losses are expected to stem from broken windows and roof damage. This will have an impact on underwriting performance and overall earnings.

Companies with a heavy concentration of automobile physical damage will also have significant losses.

However, for property insurers the increased use of actual cash value (ACV) for roof repairs, increased deductibles, and improved risk management strategies will help limit the amount of the ultimate claim payment, A.M. Best explains.

The impact on most auto physical damage insurers is also expected to be mitigated given the generally large economies of scale of major writers in the market, A.M. Best adds.

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So, while the Texas hailstorm damage is poised to exceed the nine-year average of $1.2 billion for the United States, most insurers are well-capitalized and able to handle these severe weather events.

Nevertheless, as A.M. Best says:

“The volatile weather is a harsh reminder of the damages a property and casualty writer can be exposed to and the need for companies to continue to practice prudent and evolving risk management.”

Check out this review of research and testing related to hail damage by the Insurance Institute for Business & Home Safety.

The Insurance Information Institute also has some handy statistics on hail here.

Warming Up Your Valentine’s Day With Insurance

Bitter cold and snow may be in the air for some this Valentine’s weekend, but there’s no better way to stay warm than by checking out these Valentine-themed messages from around the risk and insurance community.

First up, the Insurance Information Institute (I.I.I.) reminds us that while there is nothing more romantic than a marriage proposal on Valentine’s Day, getting adequate insurance for that ring will ensure you are financially protected.

Next, did you know that every year, thousands of Americans lose billions of dollars by falling victim to romance scams? The Financial Services Roundtable (FSR) warns that nearly every demographic is at risk, but the people who are most susceptible are the elderly and women over 40 who are divorced, widowed or disabled.

Among the most common romance scams are malicious actors (scammers) who create fake profiles on dating websites and establish relationships with other site members in order to scam them out of money.

Check out this story of the Emoji prince who thinks he’s found true love online, but soon becomes a victim of a romance scam narrated by FSR’s director of fraud risk, Roxane Schneider.

Finally, if you’re looking to heat up your romance…or your house…by lighting candles this weekend, the National Fire Protection Association (NFPA) has some timely  candle fire safety tips to consider.

From 2009-2013, U.S. fire departments responded to an estimated 9,300 home structure fires that were started by candles, causing 86 deaths, 827 injuries and $374 million in direct property damage.

On average, 25 home candle fires were reported per day over the five-year period, according to the NFPA.

The I.I.I.’s Valentine’s Pinterest Board has additional tips to ensure your loved ones and their valuables are financially protected.

Alerting You to Earthquakes… and Insurance

Earthquake resilience was  in the spotlight as the Obama administration gave its support for an earthquake-alert system on the West Coast at a White House summit Tuesday.

President Obama also signed an executive order establishing a federal earthquake risk management standard which will improve the capability of federal buildings to function after a quake.

The order requires federal agencies to ensure that federal buildings are constructed or altered using earthquake-resistant design provisions in the most current building codes.

A 2015 scientific assessment from the U.S. Geological Survey shows that more than 143 million Americans could experience potentially damaging earthquakes, nearly double the prior 2006 estimate.

The ShakeAlert early warning system being developed and tested in the West would warn  residents and businesses from at least a few seconds to a few minutes before the shaking starts.

This would be  enough time to slow and stop trains and taxiing planes, and to prevent cars from entering bridges and tunnels, for example.

A common misperception among Americans  is that earthquake coverage is provided in a homeowners or business insurance policy.

However, standard homeowners, renters and business insurance policies do not cover earthquake damage. Coverage is available either in the form of an endorsement or as a separate policy.

Residential earthquake insurance in California is sold through the California Earthquake Authority, a privately funded, publicly managed organization.

Some 85 percent of U.S. homeowners said they do not have coverage for earthquake damage in response to the Insurance Information Institute’s (I.I.I.) annual Pulse Survey.

The I.I.I. Pulse results showed significant variations in the number of consumers that have earthquake insurance across the U.S.

That number was greatest in the earthquake- prone West, where 18 percent of homeowners said they had purchased separate earthquake insurance coverage.

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Information on reducing earthquake damage to homes and businesses is available on the Insurance Institute for Business and Home Safety (IBHS)  website.

The  I.I.I. also offers facts and statistics on earthquakes and tsunamis here.

How Many Homes Are Insured? How Many Are Uninsured?

The Insurance Information Institute (I.I.I.) gets questions all the time. Here is one answered by chief actuary James Lynch:

Q: On your web page, you report an ORC International poll for the I.I.I.  found that 95 percent of homeowners had homeowners insurance. How many homes does that represent?

A: The short answer is about 70 million. And as is so often the case, I took a long route to it.

The 95 percent is the percentage of people who said they own a home and then answered “yes” to the question of whether they have homeowners insurance. We regularly survey about 1,000 people on this topic, and around 94 percent to 96 percent generally answer yes.

In the poll, we do not define what a home is, so it could be single-family home, a condo, a co-op, a duplex or anything else. In addition, there are several different types of homeowner policies, but the survey doesn’t ask which type they have. The I.I.I. designed the survey, and we doubt the typical consumer knows off the top of his head whether they bought, say, a dwelling fire policy or an HO-3, so we don’t ask. The answers would not be meaningful.

The National Association of Insurance Commissioners (NAIC) collects information on all types of homeowners policies. To muddle things a bit, one of those “homeowners” policies is really renters insurance.   In 2012, the most recent year available, there were 68.6 million policies for the various types of homeowners policies or their barebones brethren, dwelling fire (not counting the renters insurance I just mentioned).

As a reasonableness check (and because I felt like it), I created a separate estimate by using U.S. Census data from the American Community Survey ( The table is C-01-AH, if you want to look it up yourself.

According to that source, there were 75.65 million owner-occupied year-round housing units in 2013, both single- and multi-family. (There are another 4.07 million seasonally occupied homes.).

Multiplying the 75.65 by the 95 percent with insurance leaves us with an estimate of about 72 million homeowners policies covering primary residences.

Comparing the estimates: they measure two different years, 2012 and 2013 but that discrepancy isn’t critical. The number of households doesn’t vary too much from year to year. More significant: the latter estimate is indirect; it smashes together numbers from two sources (Census Bureau and I.I.I. poll). So it is probably less accurate than using the NAIC data, even though the NAIC data is older. However I find it reassuring they came to approximately the same number. That’s why 70 million seems a reasonable estimate.

Q: Thank you for your quick response. I appreciate the background/explanation. I was actually trying to determine the number of homes that are uninsured (the 5 percent). Based on your calculations below, 5 percent of the 75.65 would be 3.78 million, correct?

A: Your math is correct if you want to estimate primary residences, including condos, etc. Secondary residences would add another 200,000 approximately, being 5 percent of 4.07 million (give or take). Because it is an estimate and a rough one on a (relatively) small number, I’d round it in general terms, such as saying “between 3 ½ and 4 million homes are uninsured.”

Lots of homeowners facts and statistics at the I.I.I. website.

A Happy—and Safe—Halloween

As we put the finishing touches to our Halloween costumes we’ve rounded up some of the not-so-spooky posts from around the insurance blogosphere to keep the ghouls and ghosts away.

First up is Erie Insurance with its post 4 Lesser-Known Halloween Safety Tips. Read all the way to the end and you’ll learn of the dangers of glow sticks. As a parent to two young children who gravitate towards anything that glows, I appreciate the tip that glow sticks cause an increase in poisoning on Halloween. Make sure to tell your kids to keep them away from their mouths.

Next up is Zillow and with an excellent post on how Halloween carries potential financial risk for homeowners. Whether it’s Halloween-related fires leading to property damage or liability claims from trick-or-treaters injured on your property, some practical safety steps and a homeowners or renters insurance policy can help protect your most valuable assets.

Do you have a secure place to park your car? In this Insurance Institute for Highway Safety (IIHS) post (from 2013)  we learn  that vehicle vandalism peaks on Halloween with nearly twice as many insurance claims on October 31 as on an average day. Such claims include things like slashed tires and smashed windows. Hence the importance of comprehensive auto insurance coverage.

And for the insurance fans  among you, last but not least is a post on WillisWire, reflecting not on make-believe monsters, but on the scariest real risks faced by their clients during the year. Which one keeps you up at night? Have your say and take their poll.

Wishing all our readers a safe and Happy Halloween!