7 Surprising Facts You Didn’t Know About Home Insurance

Most homeowners tend to give their insurance policies the same level of thought as they do their water bill – it’s a necessary expense, paid regularly, and rarely examined unless something goes wrong. In fact, this “set it and forget it” mentality is part of the very issue with home insurance policies. People obtain coverage, often as a requirement for their mortgage, and then tuck the paperwork away, rarely revisiting the details.

However, beneath the surface of deductibles and coverage limits lies a world of intriguing statistics and potential pitfalls. Here are seven random, if not somewhat surprising, facts about homeowners and renters insurance that might make you think twice about your own coverage.

1. Wind and Water Reign Supreme in Claims

You might think fire or theft are the biggest culprits when it comes to homeowners insurance claims, but the numbers tell a different story. Just five key areas account for a whopping 77% of all claims filed on homeowners insurance policies. These include:

Wind: Damage from high winds, including hurricanes and tornadoes.

Non-Weather-Related Water Damage: Think burst pipes or appliance malfunctions.

Hail: Damage to roofs, siding, and windows.

Weather-Related Water Damage: Flooding from rain or snowmelt.

Theft: Burglaries and stolen property.

This breakdown highlights the importance of understanding your policy’s coverage for these specific perils, especially considering Colorado’s diverse weather patterns, from strong winds and hailstorms to heavy snow and potential for water damage.

2. Claims Are More Common Than You Think

While a major home disaster might feel like a rare occurrence, statistically, you have a decent chance of filing a claim at some point. Although exact figures can fluctuate, it’s estimated that out of approximately 70 million homeowners insurance policies in force across the U.S., about 3.5 million insurance claims are filed annually. This translates to roughly one in every 20 homeowners filing a claim each year. Considering the diverse range of potential incidents, from minor water leaks to significant storm damage, this figure underscores the value of having adequate coverage.

3. Beware of the Dog (and Other Liability Risks)

Beyond property damage, homeowners insurance also provides crucial liability coverage if someone is injured on your property. Surprisingly, about one in every 1,440 homeowners insurance policies has a liability claim filed, resulting in financial payments for legal, medical, and property damage to the injured party. And the leading cause of these claims? You might be surprised: dog bites. Following closely behind are home accidents (like slips and falls), fallen trees, incidents involving intoxicated guests, and injuries to domestic workers within the home. This emphasizes the importance of having sufficient liability coverage to protect your assets in case of unforeseen accidents.

4. Most Homeowners Understand the Necessity

Despite the potential for unexpected events, the vast majority of homeowners in America recognize the critical importance of insurance. It’s estimated that 85% of homes in the U.S. are insured by homeowners insurance. While the government doesn’t mandate it, most financial institutions make it a non-negotiable requirement to obtain a mortgage. This high percentage reflects the understanding that protecting what is often a person’s largest financial investment is paramount.

5. Renters Often Skip Crucial Protection

While most homeowners are insured, a significant portion of the renting population leaves themselves financially vulnerable. In spite of its relatively low price (often just a few dollars a month), it’s estimated that only about 44% of tenants have renters insurance. This is a concerning statistic, as renters insurance protects their personal belongings from theft, fire, and other covered perils, and also provides liability coverage if someone is injured in their rented dwelling. The cost of replacing all your possessions after a disaster far outweighs the small annual premium for renters insurance.

6. Home Insurance Costs Vary Widely

The average price of home insurance in the U.S. hovers around $1,550 annually. However, this figure is just that – an average. The actual cost of your policy can vary dramatically based on a multitude of factors, including:

The value and age of your home

The amount and type of coverage you select

Your geographic location (including local risks like hail or wildfire potential here in Colorado Springs)

The deductible you choose

Your claims history

Even your credit score in some states

This significant variability underscores the need for personalized quotes and regular policy reviews to ensure you’re getting the best value for your specific needs and location.

7. Policies Auto-Renew, But Should You?

Home insurance policies are generally renewed each year, and they will typically do so automatically if payments continue to be made. While this offers convenience, it can also lead to complacency. The fact that your policy auto-renews is precisely why it’s a good idea to have your policy reviewed by an independent agent each year while simultaneously obtaining a fresh price quote. Your coverage needs may have changed, the value of your home might have fluctuated, and there could be more competitive rates available from other insurers. An annual review ensures your coverage still aligns with your current circumstances and that you’re not overpaying.

If you have any questions about homeowners or renters insurance, whether you’re a seasoned homeowner here in Colorado Springs or a first-time renter, we invite you to contact us. We can help clarify your coverage, identify potential gaps, and even assist you with a no-cost, no-obligation price quote to ensure you have the protection you need at a competitive price. Contact us today to get started on securing your peace of mind.