How Homeowners Insurance Has Evolved Over Time

by Ryan HanleySeptember 8, 2017

The homeowners insurance industry has a rich history that is continuously evolving. From the time the first policy came about in the 1730s until now, the market has greatly changed, becoming increasingly detailed and more focused on data and risk mitigation.

The Beginning of Homeowners Insurance

The initial homeowner insurance policies created were simple and protected against the most basic of elements: fire.

In the 1730s, the first fire insurance policy was underwritten in the United States. Twenty years later, Benjamin Franklin’s Philadelphia Contributionship was the first insurer to underwrite fire protection for its customers. The initial government regulators came along in the 1820s and 1830s, and fire insurance companies began popping up everywhere. Then, the Great Fire of New York in 1835 occurred and bankrupted many of them.

By the 1850s, insurers began to use data on fire loss to determine that some businesses, like paper mills, were more at risk of fires than others. They also hired mapmakers, who would help them better understand geographic exposure and risk of fires. In the 1860s, the National Board of Fire Underwriters formed a trade organization to ensure that there were industry standards for forms and rates.

Natural Disasters Affect the Insurance Industry

The Great Chicago and Great Boston Fires of the 1870s bankrupted many insurers and caused rates to increase across the board. By the 1910s, New York had become the first state to oversee insurer rates, and by the 1950s, the first multi-peril policy for fires, liability, and inland marine was formed. This policy was extremely popular because it was simpler and broader than more traditional plans. A high growth adoption of this insurance occurred between the 1960s and 1980s.

During this time, the ISO Public Protection Classifications were utilized to price homeowners policies, and regulators began to require easy to read policies. In the 1990s and 2000s, insurers sought out higher rates and to boost consideration of risk concentration because of Hurricane Andrew. Hurricanes Katrina, Wilma, and Rita bankrupted numerous insurers and caused them to decrease coverage in areas that were at risk of hurricanes.
Image of homeowner's insurance document

The Rise of Big Data

From the early 2000s up until now, insurers have been utilizing big data to figure out more sophisticated policy pricing. Credit scoring was brought in as a way to determine the financial risk of insuring a homeowner, and homeowners pricing used auto variables as well. In the future, big data will become even more prevalent because it allows insurers to more accurately set rates and assess risk.

Today’s Most Significant Risks for Homeowners

As the homeowners insurance industry has evolved, customers have had to shift their thinking about insurance and ensure they are protected under any and all circumstances.

Today’s homeowner should be concerned about the possibility of a natural disaster. According to Accuweather and a report from the New England Journal of Medicine, global natural disasters have been on a steady rise since the 1970s. And since 1990, natural disasters have affected roughly 217 million people around the world every single year.

For these reasons, hurricanes, earthquakes, floods, and tornado coverage should be included in your policy. If you live in an area that is prone to natural disasters, you should look into additional coverage.

Another big risk is the Internet of Things, which connects every type of device to the internet. You may have a connected thermostat, washer, dryer, refrigerator, or oven. If hackers have access to your devices, they can turn them on and off, steal your information, and cause problems for your home. Be sure to carefully password protect these devices.

Lastly, it has been found that homeowners have been spending more on goods like fine art, jewelry, and antiques than on investing in the stock market. They are also failing to get their belongings accurately appraised. If these goods are lost in a disaster or stolen, the monetary value cannot be properly reimbursed.

Getting Coverage for All Circumstances

When determining the type of coverage you need for your home, it’s crucial that you seek out a homeowners insurance agent. They can help you find policies that will protect you in every possible situation. Now is the time to safeguard your home and your belongings and protect yourself and your family, no matter what the future holds.

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About The Author
Ryan Hanley
Ryan Hanley is the Vice President of Marketing at and the Managing Editor of Agency Nation. He is also a speaker, podcaster and author of the Amazon best-seller, Content Warfare. Ryan has over 10 years of insurance expertise and blogs frequently to help consumers understand complicated insurance topics.