Average Lightning Claim Costs up by 25%

June 26, 2013

lightningWhile the destruction caused by tornadoes and hurricanes may grab the headlines, intense lightning storms also take their toll throughout the United States. In fact, lightning strikes cost nearly $1 billion in insured losses in 2012, according to the Insurance Information Institute (I.I.I.).

An analysis of homeowners insurance data by the I.I.I. and State Farm found there were 151,000 insurer-paid lightning claims in 2012, down nearly 19 percent from 2011. The I.I.I. puts the average lightning paid-claim amount at $6,400 in 2012, up 25 percent from 2011. Taken together, these two factors resulted in $969 million in total paid lightning claims, up 1.7 percent from 2011.

The incidence of lightning claims in 2012 continues a downward trend. Since 2004, the number of paid lightning claims tumbled an average of roughly 7.5 percent per year, resulting in a 46 percent drop over the eight-year period through 2012. This decline may be attributed to an increased use of lightning protection systems. Despite this drop, the average cost per claim rose 142 percent from 2004-2012. (By comparison, the consumer price index rose by 21.5 percent in the same period.)

“The average cost per claim continues to rise, in part because of the huge increase in the number and value of consumer electronics in homes,” said Loretta Worters, vice president of the I.I.I.”

Number of paid claims Insured losses ($ millions) Average cost per claim
2004 278,000 $735.5 $2,646.0
2005 265,700 819.6 3,084.0
2006 256,000 882.2 3,446.0
2007 177,100 942.4 5,321.0
2008 246,200 1,065.5 4,329.0
2009 185,789 798.0 4,296.0
2010 213,278 1,033.5 4,846.0
2011 186,307 952.5 5,112.0
2012 151,000 969.0 6,400.0
Percent change,
-19.0% 1.7% 25.2%
Percent change,
-45.7% 31.7% 141.9%
Source: Insurance Information Institute, State Farm .

Worters noted that given last year’s record tornado activity and the fact that tornadoes are usually accompanied by severe thunderstorms, it was not surprising that the number of lightning claims remained close to $1 billion.

Insurance Coverage
Damage caused by lightning, such as fire, is covered by standard homeowners and business insurance policies. Some home and business policies provide coverage for power surges that are the direct result of a lightning strike.

The optional comprehensive portion of an auto insurance policy also provides coverage for lightning damage.

Source: I.I.I.

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