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Homeowners Insurance, Lightning

Cost of Lightning-Caused Claims Soared Due to 2020’s U.S. Wildfires

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By Loretta Worters, Vice President, Media Relations, Triple-I

For the fourth consecutive year, the number of lightning-caused U.S. homeowners insurance claims decreased in 2020, even as the average value of those claims has more than doubled since 2017, according to Triple-I’s analysis of national insurance claims data. 

Lightning-related homeowners insurance claim costs nationally rose dramatically due to a series of lightning strikes across Northern California in 2020.  The average cost per lightning claim in California was $217,555 in 2020, while the national average for this type of claim was nearly $29,000.

Triple-I also found that:

  • More than $2 billion in lightning-caused U.S. homeowners insurance claims were paid out in 2020 to 71,000-plus policyholders
  • The average cost of a lightning-caused U.S. homeowners insurance claim increased 141 percent between 2019 and 2020 (from $11,971 to $28,885) and 168 percent from 2017 to 2020 (from $10,781 to $28,885)
  • The average number of lightning-caused U.S. homeowners insurance claims decreased by nearly 7 percent between 2019 and 2020 (from 76,860 to 71,551)

The wildfires in California and elsewhere damaged homes which had to be either repaired or rebuilt with more expensive construction materials. The National Association of Home Builders reported that, between mid-April and mid-September 2020, lumber prices soared more than 170 percent nationwide, adding $16,148 to the price of a typical, new single-family home.

The August Complex Fire, started by lightning strikes in August 2020, was the largest in California’s history, as defined by acres burned, according to the California Department of Forestry and Fire Protection (CAL FIRE). It spread across 1 million acres and impacted seven counties.

State-by-State Numbers

Florida – which has the most thunderstorms— remained the top state for lightning-caused homeowners insurance claims in 2020, with 6,756, followed by Georgia (4,686), Texas (4,675), and California (4,233).

Homeowners Insurance Coverage

Damage caused by lightning, which results in a fire, is covered under standard homeowners insurance policies.  Some policies provide coverage for power surges that are the direct result of a lightning strike, which can cause severe damage to appliances, electronics, computers and equipment, phone systems, electrical fixtures and the electrical foundation of a home.

In recognition of Lightning Safety Awareness Week, June 20-26, the Triple-I and the Lightning Protection Institute (LPI), a national organization that establishes standards for specifying and installing lightning protection systems and promotes lightning safety, encourage homeowners to install  lightning protection systems in their homes. 

“When we think of lightning safety, we should make a distinction between personal safety and property protection,” said Tim Harger, LPI’s Executive Director.  “Personal safety is what we do during a storm and the safest place in any lightning event is within a structure protected by a properly designed, inspected and certified lightning protection system,” he said.  “Installing lightning protection systems in our homes or businesses is an action we can take before a storm that can mitigate against property damage.”  

Homeowners Insurance

Lightning-related homeowners insurance claims down, costs up

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The number of lightning-caused U.S. homeowners insurance claims has decreased over the past few years, yet the average cost per claim has increased, according to Insurance Information Institute (Triple-I) findings.

“It’s not surprising that lightning-related homeowners insurance claims costs have risen,” said James Lynch, chief actuary and senior vice president of Research and Education at the Triple-I. “Homes are more susceptible to lightning damage because electronic systems have become more interconnected – think Smart Homes – which have an easy gateway to much of a home’s electronic network, damaging scores of devices and appliances at once.”

Triple-I found that:

  • More than $920 million in lightning claims were paid out in 2019, up from $909 million in 2018
  • There were 76,860 lightning claims in 2019 down from 77,898 in 2018
  • The cumulative value of claims caused by lightning rose 1.2 percent between 2018 and 2019 and 0.4 percent from 2017-2019
  • The average cost that insurers paid on lightning-related claims increased by 11 percent between 2017 and 2019, and by 2.6 percent from 2018 to 2019.

Florida – the state with the most thunderstorms— was the top state for lightning claims in 2019, with 6,821, followed by Texas (5,780) and California (5,100).  Of the states with largest number of claims, Texas had the highest average cost per claim at $15,278.

Homeowners Insurance Coverage

Damage caused by lightning, such as a fire, is covered under standard homeowners insurance policies.  Some policies provide coverage for power surges that are the direct result of a lightning strike, which can cause severe damage to appliances, electronics, computers and equipment, phone systems, electrical fixtures and the electrical foundation of a home.

In recognition of Lightning Safety Awareness Week, June 21-27, the Triple-I and the Lightning Protection Institute (LPI), a national organization that promotes lightning protection education, awareness and safety, encourage homeowners to install a lightning protection system in their home. 

“When it comes to lightning, safety and liability are two important factors,” said Tim Harger, executive director of LPI. “The safest place in any lightning event is within a structure protected by a properly designed, inspected and certified lightning protection system. Lightning protection systems protect the electronic infrastructure, core and knock-on functions of properties and can significantly reduce the more than $900 million of insured claims.”

To locate an LPI-certified lightning protection system installer in your area, click here.

U.S. lightning fatalities have also been declining, due partly to increased awareness of lightning danger.

To learn more about lightning safety click here.

Homeowners Insurance

What a Shocker: Florida Tops the List for Lightning Claims

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By Loretta L. Worters, Vice President – Media Relations, Insurance Information Institute

Authorities believe a lightning strike caused a home to go up in flames in the Riverview area of Florida on Friday, June 14, ironically just days before Lightning Safety Awareness Week (June 23-29) commenced.

Often referred to as the lightning capital of the nation, it is no revelation that Florida ranked first for lightning caused homeowners insurance claims in 2018, with 7,108 claims, followed by Georgia (5,539) and California (4,909), a new addition to the line-up. Texas, which had ranked second in 2016, fell to fourth place (4,559).

The number of lightning-caused homeowners insurance claims decreased in 2018—the third straight year it has done so—yet the average cost per claim has soared since 2016.  The I.I.I. findings, based on national insurance claims numbers, determined that more than $900 million in lightning claims were paid out in 2018 to nearly 78,000 policyholders.  The cumulative value of claims caused by lightning rose six percent between 2016-2018.

With increased labor and construction costs as well as a consumer appetite for smart home products, it’s not surprising that lightning-related homeowners insurance claims costs have risen.  The average cost per claim rose eight percent from 2017 to 2018. However, the average cost per claim between 2016 and 2018 increased 21 percent – a veritable bolt from the blue!