Annual Probability of Home Damage from Natural Disaster

Approximately 5% of US homes sustain some degree of damage from natural disasters each year, ranging from minor wind and water damage to total destruction. In recent years, natural disaster losses have averaged $100-$150 billion annually in the US. The number of billion-dollar disaster events has increased dramatically, from an average of 3-4 per year in the 1980s to over 20 per year recently.

The most common causes of home damage from natural disasters include severe thunderstorms and hail (the most frequent, causing about 40% of insured losses), hurricanes and tropical storms (about 25% of losses), flooding (about 15%), tornadoes (about 10%), and wildfires (about 5%). The geographic distribution of risk varies enormously: hurricane risk concentrates along the Gulf and Atlantic coasts, tornado risk in the central US, earthquake risk along the West Coast, and wildfire risk in the western states.

Standard homeowners insurance covers wind and hail damage but typically excludes flood damage (requiring separate NFIP or private flood insurance) and earthquake damage (requiring separate earthquake insurance). Only about 15% of US homeowners have flood insurance, and only about 13% in earthquake-prone areas have earthquake coverage. Climate change is expected to increase the frequency and intensity of many natural hazards, potentially affecting insurance availability and affordability.