Category Archives: Homeowners Insurance

How affordable is homeowners insurance?

The average homeowners insurance premium was $1,249 in 2018, up by 3.1 percent from the previous year, according to the latest data from the National Association of Insurance Commissioners (NAIC).  In 2017 the average premium was up 1.6 percent.

To put this in context, the consumer price index, a measure of the price of goods and services in the United States, rose by 1.9 percent in 2018 and by 2.1 percent in 2017.

The average renters insurance premium fell 0.6 percent in 2018, marking the fourth consecutive annual decline. 

It’s important to note that the average homeowners or renters premium is an imperfect measure of the relative “price” of insurance, according to the NAIC. That’s because the ultimate cost of your policy will depend on a wide variety of factors such as the differences in hazards, economic conditions, and real estate values from state to state.

Insurers determine homeowners insurance premiums based on the amount of coverage purchased (generally based on the value of the insured property), the type of property covered, the types of perils covered, and the specific limits and deductibles a policyholder chooses.

Click here for a state-by-state graphic of average homeowners insurance premiums.

The financial burden of homeownership insurance
Americans generally don’t view the cost of homeowners insurance as a financial burden. Triple-I’s 2017 Consumer Insurance Survey found that only 31 percent of Americans consider homeowners insurance to be a financial burden. This is the lowest level in more than a decade and represents a significant drop from the 49 percent of people in 2009 who said the cost of homeowners insurance was a financial burden.

One reason homeowners insurance has not been considered a financial burden is that Americans’ income growth has consistently outpaced home insurance costs; however this trend may be temporarily interrupted by the pandemic-related recession of 2020. According to an analysis by Risk Information‘s Property Insurance Report (PIR), the trend was already apparent in 2018.

The PIR report suggests that the trend toward more affordable insurance appears to have continued in 2019, but acknowledges that in 2022, when the NAIC releases average homeowners premiums for 2019, the HURT Index may fall lower than 1.4 percent for the first time since 2010.

Customer service

“Homeowners insurance customers are the single-most-valuable group of personal lines customers for P&C insurers,” said Robert M. Lajdziak, senior consultant of insurance intelligence at J.D. Power.

“They have a significantly higher bundling rate, 38 percent higher product penetration beyond home and auto, and their tenure is twice the length of a monoline auto customer. The potential ‘lifetime customer value’ of homeowners makes meeting their needs and motivations to renew a critical task for the industry.”

Large, established insurers and insurtech startups are expected to compete for customers’ premium dollars by delivering great service and converting renters insurance clients into homeowners insurance clients, according to J.D. Powers.

Millennial customers in particular are more likely to select their homeowners insurer based on good service experience and are much more likely than Boomers to use insurer-provided tools to inventory their possessions, thereby increasing the level of engagement with their insurer and creating additional opportunities to develop loyalty through good customer service.

Echoing J.D. Powers’ findings, a Deloitte survey found that respondents aged 18 to 34 with $50k to $100k+ annual income who have purchased a house in the past three years, referred to as the “gadget group,” are more likely to purchase a ‘connected and preventative’ home insurance service than any other type of policy.

Homeowners have also expressed a strong demand for parametric type home insurance products, according to Deloitte. This type of insurance pays claims of a pre-agreed amount automatically when an event falls within set parameters, such as a level of rainfall or speed of wind.

Dog bite claims fell 4.6 percent in 2020 despite pandemic pet adoption surge

Pandemic-related lockdowns have led many people to bring new furry friends into their homes.

A survey from the Insurance Research Council (IRC), found that 21 percent of homeowners reported adopting a dog in 2020.

Despite the increase in the number of dogs in American homes, homeowners dog bite (and related injury), claims fell overall by 4.6 percent in 2020 from the previous year, to 16,990 from 17,800 nationally, according to Triple-I and State Farm analysis.

March had the most dog-related injury claims last year, when people first went into lockdown at the start of the COVID-19 pandemic, according to State Farm. Dog bites were up 21.6 percent from the previous March, likely due to dogs dealing with owner stress, disruption in routines and more people around the house throughout the day. Experts fear another disruption—this time cause by the easing of restrictions for activities outside the home—could lead to another spike in bites.

Though the overall number of claims decreased, the total cost of claims increased by 7.1 percent to $853.7 million, up from $796.8 million in 2019. And the average cost per claim increased 12.3 percent to $50,245, up from $44,760 in 2019.

Dog bite related claims costs have been climbing for years. The average cost per claim nationally has risen 162 percent from 2003 to 2020, due to increased medical costs and the upward trend in the size of settlements, judgments, and jury awards.

Claims costs are attributable not only to dog bites but also to dogs knocking down children, cyclists, and the elderly, which can result in costly injuries.

The latest Triple-I dog bite claim figures are released in conjunction with National Dog Bite Prevention Week, an event held each year to help reduce the number of dog bites.

Children are particularly at risk for dog bites and are more likely to be severely injured, so it’s essential for parents to teach their kids to be safe around strange dogs and their own pets.

Dog training is, of course, key to preventing dog bites and related injuries for everyone, and National Dog Bite Prevention Week’s organizers offer many practical tips. This year, dog experts are particularly focused on re-socializing animals that have been isolated along with their humans for the past year.

To provide more tips for pet owners, members of the National Dog Bite Prevention Week Coalition— which includes the American Veterinary Medical Association (AVMA), State Farm, Insurance Information Institute (Triple I), American Humane and Victoria Stilwell Positively— will be hosting a Facebook Live event on Monday, April 12, at 1 p.m. Eastern.

Triple-I recommends that you check your homeowners or renters insurance policy to be sure it covers liability for dog bites and related injuries. Click here for more details about dog bite liability insurance.

Related content:

Infographic: National Dog Bite Prevention Week

Spotlight on dog bite liability

Facts about pet insurance

How to survive severe cold weather

During the deep freeze across multiple states this week, some U.S. electric companies are being forced to pull the plug on consumers in the form of “rolling blackouts” to conserve energy, Insurance Information Institute’s (Triple-I) Scott Holeman reports in the video above.

The severe cold has propelled The Homeowner’s Severe Cold Weather Survival Guide to the “most read” article position at the Triple-I’s website.

Much of North America experiences periods of severely cold weather and is susceptible to snow and ice storms—extreme conditions that can inflict considerable damage on homes and create liability risks. Standard homeowners policies will cover most disasters that result from a freeze—but when the weather outside is frightful, it’s better to minimize the potential risks.

The Survival Guide lists a few steps that can be taken inside and outside a home to reduce risks of property damage, such as:

INSIDE THE HOUSE

Check the location for the main water shutoff in your home. And refresh your memory on—or learn—how the shutoff works to prevent your home’s pipes from bursting.

Open hot and cold faucets enough to let them drip slowly. In severely frigid temperatures, keeping water moving within the pipes will help prevent freezing.

Check to see that fireplaces, wood stoves, and electric heaters are working properly. Make sure no combustible items are near a home’s heat sources. This week’s widespread power outages have contributed to Kerosene Heater Safety becoming the second-most popular article at the Triple-I’s website.

OUTSIDE THE HOUSE

Watch for ice dams near gutter downspouts. Ice dams occur when water is unable to drain through the gutters and instead seeps into the house. Clear gutters of leaves and debris to allow runoff from melting snow and ice to flow freely at the base of the gutter, known as the downspout.

Keep your garage doors closed. This will prevent weather damage to whatever is stored in the garage. Plus, if your garage is attached to your house, the home entrance door from the garage is probably not as well-insulated as an exterior door so this will keep more heat in.

Double-check for dead, damaged, or dangerous tree branches and have them removed. Even if they looked sound earlier in the year, trees can be affected by ice, snow, or wind. When stressed, branches can fall and damage your house or car, or injure someone on or near your property.

The Triple-I has additional winter weather resources:

Snowstorm-Caused Damage Covered Under Auto and Home Policies
Winter Storms
How to file A Homeowner’s Claim
Minimizing winter weather risks
If the power goes out, can you be reimbursed for spoiled food?

Poverty and opioids unexpectedly tied to rise in personal umbrella claim severity: Gen Re

Insurers saw  more costly personal umbrella claims before the start of 2020, according to a Gen Re analysis, and the reinsurer expects  such claims  to continue as we emerge from the COVID-19 pandemic.

Personal umbrella insurance covers liability costs beyond the limits of the policyholders’ homeowners or auto policies.

Gen Re has uncovered some of the top drivers for the large claims, and they have to do with some of society’s harshest ills. Top reasons cited were increases in:

  • the annual poverty rate;
  • opioid prescription rates;
  • fatal accidents;
  • brain injuries;
  • attorney representation; and
  • injuries involving a fatality and multiple claimants.

Other notable predictors linked with higher claims severity include laws permitting recreational marijuana and a lack of motorcycle helmet laws.

Gen Re said poverty, opioid use, and marijuana laws were unexpected predictors of umbrella claim severity and that all of the analysis’ findings “will facilitate deeper client interaction on this line of business.”

 “Social inflation” – a term used to describe growth in liability risks and costs related to litigation trends – has been a growing concern for insurers. The phenomenon has mostly affected the commercial auto and general liability lines, but the findings here – particularly the increase in attorney representation – suggest that it might be making inroads into personal lines.

Is my exotic pet covered by insurance?

Photo by Andre Mouton from Pexels

Did you know that December 14 is international monkey day? This delightful holiday to honor everyone’s favorite simians was invented by two Michigan State art students in 2000.

Suggestions for how to celebrate this holiday include donating to conservation efforts or reading to children about monkeys.

Of course, here at the Triple-I, the holiday naturally got us thinking about people who keep monkeys and other exotic and unusual pets, and the insurance implications.

According to several sources we consulted, keeping monkeys as pets is never a good idea. Keeping a monkey as a pet is cruel to the animal, is illegal in many jurisdictions, and may result in serious and even deadly injuries to humans.

Nevertheless, according to one animal advocacy group, about 15,000 primates are kept as pets in the U.S., and the American Veterinary Medical Association estimates that 1 in 10 American households has an exotic pet (defined as any animal native to a foreign country).

Injuries caused by pets, if they are covered by insurance, would be covered under a comprehensive homeowners insurance policy. However it’s important to read your policy and see exactly what’s covered. If you’re not sure, speak to your insurance agent. You should expect to pay more for coverage and carry higher liability limits if you legally own exotic animals. And homeowners insurance also frequently excludes any physical damage caused by pets.

Exotic animals can require expensive veterinary treatments. While pet health insurance is becoming increasingly available and affordable, many insurers cover a restricted list of species. Pet Assure, a discount program available through some employers, is accepted for many kinds of animals.

Friday the 13th is less scary with insurance

Superstitious people consider Friday the 13th an unlucky day. The irrational fear of the number 13 even has a scientific name: triskaidekaphobia.

While Friday falls on the 13th at least once every calendar year, it can happen up to three times in the same year.

Whether you believe in this unlucky day or not, if you have purchased an HO-3 insurance policy for your home you are protected against even more than 13 perils. Lucky for you, we’ve compiled all you need to know about the basics of homeowners insurance here.

Keeping Halloween Safe, Even During a Pandemic

Dan and Ben, ready for a safety-conscious Halloween last year.

My five-year-old nephew, Ben, is a great source of pride to his electrician father, Dan. Last Halloween, Ben refused to trick-or-treat at a particular house because he noticed that the decorations there were a fire hazard.

Halloween is supposed to be fun, but it has always involved risks and potential liabilities. The video below outlines some of the “traditional” hazards and ways to mitigate them, from eliminating trip-and-fall dangers to preventing fire and pet-related perils.  

And while much of the focus of Halloween-risk mitigation is on the home, Donald R. Grady, a Boston personal injury attorney, says the biggest dangers actually involve cars.

“You see an uptick in automobile accidents,” Grady says. “Especially with teenagers, who don’t have adults with them and who rush from house to house.”

The curse of 2020

2020 has aged us all….

Perhaps predictably by now, 2020 has brought the spooky holiday threats of its own. COVID-19 has introduced new Halloween concerns.

The Centers for Disease Control and Prevention (CDC) has published a list of low-, moderate-, and high-risk Halloween activities for a time of pandemic.

Lower-risk activities include:

  • Carving or decorating pumpkins with members of your household and displaying them
  • Carving or decorating pumpkins outside, at a safe distance, with neighbors or friends
  • Decorating your house, apartment, or living space
  • Having a virtual Halloween costume contest
  • Having a Halloween movie night with people you live with.

Moderate-risk activities include:

  • Participating in one-way trick-or-treating, where individually wrapped goodie bags are lined up for families to grab and go while continuing to social distance
  • Having a small group, outdoor, open-air costume parade with people distanced more than 6 feet apart
  • Attending a costume party held outdoors, where protective masks are used and people can remain more than 6 feet apart.

The CDC provides caveats and additional guidance for these and other moderate-risk activities, so if you’re even thinking about them, definitely read the relevant guidance. It advises against the following:

  • Traditional trick-or-treating where treats are handed to children who go door to door
  • “Trunk-or-treat,” where treats are handed out from trunks of cars lined up in large parking lots
  • Attending crowded costume parties held indoors
  • Going to an indoor haunted house where people may be crowded together and screaming
  • Going on hayrides or tractor rides with people who are not in your household
  • Using alcohol or drugs, which can cloud judgement and increase risky behaviors
  • Traveling to a rural fall festival that is not in your community if you live in an area with community spread of COVID-19.

Poll: Homeowners Gain
in Disaster Prep; Coverage Understanding Still Lags

The 2020 Triple-I Consumer Poll found that homeowners are protecting their properties against disasters like flooding and hurricanes at a higher rate than previously reported, a welcome development as the 2020 Atlantic hurricane season got off to an early start and is expected to produce a higher-than-average number of storms.

 “The insurance industry’s focus on resilience is starting to pay dividends as more Americans recognize the very real risks their residences face from floods, hurricanes, and other natural disasters,” said Sean Kevelighan, CEO, Triple-I. “There is still time to act. Hurricane Sally today became the eighth named storm to make landfall in 2020 but the Atlantic hurricane season continues through the end of November.”

However, the poll also found that greater consumer understanding on insurance coverage is still needed.

In something of a surprise, 27 percent of homeowners surveyed reported they have flood insurance, the highest level of flood coverage reported since the Triple-I began asking Americans this question in 2007. Most insurance industry and FEMA National Flood Insurance Program (NFIP) sources estimate anywhere from 10 to 15 percent of U.S. residences are covered under a flood insurance policy.

It is possible a number of Triple-I Consumer Poll respondents with homeowners insurance believe they have flood coverage when they actually do not. The discrepancy between those who have flood insurance and those who think they do gives insurers an opportunity to inform their customers about the need to purchase flood insurance, either from the NFIP or a private insurer, according to the Triple-I.

In addition to floods and hurricanes, the poll looked at how Americans assessed their risks from wildfires and earthquakes and surveyed the percentage of U.S. drivers who received auto insurance premium relief this year after the pandemic reduced miles driven nationwide. 

The poll was conducted in July and is available here.

If the power goes out, can you get reimbursed for spoiled food?

Following a major disaster like Hurricane Laura extended power outages are common. Nearly 800,000 customers in Louisiana and Texas were without power after the storm hit. However, most electric utility companies do not offer their customers reimbursement for food spoilage caused by long-term power outages.

In the areas of Louisiana and Texas affected by Hurricane Laura, none of the power companies serving those areas provide such reimbursements, according to Bill Davis of Triple-I .

Insurance companies will usually cover up to $500 of food that spoils from a power outage caused by a covered peril under standard homeowners insurance policies. Homeowners insurance deductibles will apply to food spoilage coverage, however, so a $500 deductible, which most policyholders carry, would mean that the policy would only pay if the policyholder suffered more than $500 in food spoilage losses. Some insurers offer food spoilage coverage with a separate deductible for an additional premium.

Ordered to evacuate due to Hurricane Laura? You might have insurance coverage for additional living expenses

Loretta Worters, Vice President Media Relations, Triple-I

People who evacuated their residence due to Hurricane Laura may have coverage for additional living expenses under either their homeowners or renters insurance policies.

Additional living expenses (ALE), also known as Loss of Use, pays the additional costs of living away from home if you cannot live there due to mandatory evacuation or as a result of damage to your home from an insured catastrophe, such as a hurricane. It covers hotel bills, restaurant meals and other costs, over and above your usual living expenses.  It can also include storage fees, mileage if you have to drive farther to work, pet boarding and laundry.  Even utilities that are more expensive in your temporary home may be included.  Also remember you are entitled to stay in a place that’s comparable in size and quality to your house.

Keep in mind that the ALE coverage in your homeowners policy has limits—either a percentage of your dwelling coverage – typically 20 percent,  or a time limit, usually 12 months. If you rent out part of your house, ALE also covers you for the rent that you would have collected from your tenant if your home had not been destroyed. This is sometimes insured on an actual-loss-sustained basis (what the homeowner would have earned had the loss not occurred).

Consumers who have chosen to go to a hotel because their power is out, won’t be eligible for ALE reimbursement.  ALE is only triggered through a mandatory evacuation or if the property is considered uninhabitable.  If you left because of a mandatory evacuation order but stayed away because the power was out, you may only be eligible to claim expenses for the time until the evacuation order was lifted. 

Standard home insurance also doesn’t cover ALE as a result of flood damage. The National Flood Insurance Program doesn’t include additional living expenses either, although there are some privately sold flood policies that do. Consult your insurance policy or contact your insurance professional for details.