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Property Insurance Claims Law

Property Insurance Claims: U.S., Michigan, and Ohio — What’s Most Frequent and Most Costly

Property insurance losses in the United States are driven by a handful of major perils. Below we break down the most frequent causes of property loss claims and the most expensive types of claims (by average cost and total impact), for both residential and commercial properties. We also discuss current claims trends(which perils are becoming more common or costly) and litigation trends (common legal disputes like bad faith, appraisal, and subrogation).

Disclaimer: This and all posts are for informational purposes only and do not create an attorney-client relationship. We are licensed in Michigan and Ohio and are available for consultation in property loss cases nationally and are regularly admitted pro hace vice to assist local counsel and our clients with out of state interests. Please contact us to discuss the specifics of your property insurance claims.

United States — Most Frequent & Most Expensive Perils in Property Insurance Claims Law

Property damage dominates homeowners insurance claims nationally (over 97% of claims), with wind and hail storms, water damage (including freezing), and fire being the leading causes by both frequency and total losses. Commercial property insurance shows similar patterns, with fire and weather-related events driving large losses.

Distribution of U.S. homeowners insurance claims by cause (approximate % of claims)

  1. Wind and Hail: The most common property claims result from windstorms (including tornadoes and straight-line winds) and hail damage. About 1 in 35 insured homes files a wind or hail claim each year. These storms make up roughly 30–35% of home insurance claims nationally. (In high-risk regions, this share is even higher – e.g. convective storms in the Midwest and Great Plains.) For businesses, windstorms (including hurricanes) are also a leading cause of property damage claims.

  2. Water Damage (including Freezing, frozen pipes): Non-weather water damage (burst pipes, plumbing leaks) and freezing are another very common cause. Approximately 1 in 60 homes has a water damage or freeze claim each year. These claims account for roughly 25–30% of homeowners claims nationally, Insurers paid out over 9,000 claims for frozen pipes in 2022 (over $181 million, averaging ~$20k each), illustrating how costly winter freeze losses can be. Water damage is a leading cause of loss for both homes and commercial buildings.

  3. “All Other” Property Damage: Various other perils (e.g. vandalism, malicious mischief, collapse, appliance/roof leaks) collectively make up ~10–15% of claims. While no single one of these perils rivals the big causes above, together they form a significant share. For example, vandalism and malicious mischief are included in this category and can be an issue for both homeowners and businesses (especially vacant properties). Our clients have suffered millions of dollars in losses when these types of events occur in commercial settings and in luxury homes. 

  4. Fire and Lightning: Fire is a less frequent but very serious cause of loss. Only about 1 in 400 homes files a fire or lightning claim in a year (roughly ~5% or less of claims by count). However, fire and lightning claims account for a large share of insurance payouts due to their high severity. Fires (from accidents, electrical failures, lightning strikes, wildfires, etc.) can devastate entire structures. Our experience has been that in commercial settings, fire is consistently a top cause of large-loss claims (e.g. warehouse or factory fires). 

  5. Theft and Burglary: Theft is a relatively infrequent property claim (around 1 in 700 homes per year experience a theft claim, just ~2–3% of homeowners claims). Average theft losses are comparatively small, but theft/vandalism can be more common for businesses (burglary of commercial contents, etc.). Theft remains a notable cause of insured loss, and prevention (alarms, security) is key for both home and business owners. 

Commercial Property: For businesses, the same hazards – fire, wind, water, theft – are prevalent. According to industry data, the top commercial property claims include fire/smoke damage (even a small fire can require extensive cleanup), water damage (e.g. sprinkler system leaks or roof leaks), and weather damage (wind, hail, winter storms). Business interruption often accompanies these physical losses, compounding the cost. For our clients, when their commercial property suffers a catastrophic property event, we are usually also handling the accompanying business interruption claim since their ability to continue to conduct business has been so drastically affected by the property loss. 

Top 5 Most Costly Claim Types (U.S.)

By average payout per claim, fire is by far the most expensive property loss event, while wind, hail, and water losses – though frequent – tend to be moderate on a per-claim basis. Below are approximate average claim severities (indemnity payouts):

  1. Fire and Lightning – Highest severity. The average fire claim is ~$77,000 for homeowners (2016–2020 data). Fires are costly because they often destroy large portions of structures and contents. Lightning surges can also cause fires or extensive electrical damage. Commercial fire losses can be even larger (often reaching six or seven figures for large facilities). For example, wildfires and urban conflagrations can each cause tens of billions in insured losses in aggregate (the 10 costliest U.S. wildfires combined caused ~$40 billion insured loss). Many of the fire losses we handle regular have extensive loss inventories where total costs can run into the millions for large homes and commercial properties. 

  2. Wind and Hail – Moderate severity, high total losses. The average wind or hail claim is around $11,600 for homeowners. Roof damage is a common expense. While individual claims are moderate, wind/hail events are so frequent and widespread that they constitute the largest share of total losses (about 40% of all home insurance losses in 2022). Major wind catastrophes drive huge payouts: e.g. hurricanes – essentially massive windstorms – are the costliest disasters in U.S. history. Hurricane Katrina (2005) caused about $65 billion in insured property losses (inflation-adjusted ~$102B) and Hurricane Ian (2022) caused an estimated $50–65 billion in insured losses. Even non-hurricane convective storms cause billions annually (the 2019 Midwest tornado outbreak in Ohio and other states caused ~$5 billion in losses. Hail in particular is extremely costly nationwide – from 2017–2019 there were 2.7 million hail claims in the U.S., with Texas (638k claims) and Colorado (380k) leading the nation.

  3. Water Damage and Freezing – Moderate severity. Water damage claims average ~$11,000–$12,000. A burst pipe or leaky plumbing can ruin drywall, flooring, and personal property. If not remediated quickly, water issues can lead to mold, which drives up claim costs. In cold regions, a single frozen pipe burst can easily cost tens of thousands – Michigan homeowners, for example, reported over $23 million in freeze-related damage in one winter. We also have clients who have suffered millions in losses from falling trees during Michigan ice and other storm events. For our commercial properties, we see extensive water damage (from plumbing, roof leaks, sprinkler discharges, etc.) as also a major driver of losses.

     

Total Loss vs. Average: It’s important to distinguish high-frequency vs. high-severity. Wind and water events happen often, so they rack up the greatest total insured losses nationwide (wind/hail alone ~40% of incurred losses in 2022). In contrast, infrequent disasters can individually cause massive losses: e.g. earthquakes – while rare – can be devastating (the 1994 Northridge quake cost insurers ~$20 billion, inflation-adjusted ~$45B). Similarly, floods (usually insured via the NFIP) and hurricanes can each dwarf a year’s worth of routine losses. Thus, by total cost, the top hazards to U.S. insurers are hurricanes, other severe storms, wildfires, floods, and quakes – even though day-to-day claims are usually wind, water, or fire from more isolated incidents.

National Claims Trends

Climate and Weather: In recent years, the insurance industry has faced surging catastrophe losses. The frequency and severity of storms are increasing, driving up claims for wind, hail, and water damage. For example, 2023 saw a marked jump in convective storm claims (thunderstorm, tornado, hail) due to unusually active weather. Insurers now almost expect $100B+ in U.S. disaster losses annually as a “new normal”. Areas once thought low-risk are seeing more volatile weather (e.g. severe thunderstorms in the Midwest, extended freeze events in the South), catching homeowners off guard. Wildfire risk has also grown in the West, leading to unprecedented fire claims (2017–2018 California wildfires each topped $10–$13B insured). These trends are reflected in rising premiums and insurer wariness in high-risk regions.

Rising Claim Costs: The average cost per property claim has been climbing faster than inflation for decades. From 1997 to 2013, the average homeowners claim payout nearly tripled (from $2,676 to $8,787) – an ~7.8% annual increase, far above general inflation. Several factors drive this: homes are getting bigger and costlier to repair (the median new house is 21% larger than in 1997), building materials (like asphalt roofing) have become more expensive, and more intense weather means more severe damage. For example, roofing claims have ballooned due to both more frequent hailstorms and higher costs per roof (labor and materials). Water damage claims have grown with aging infrastructure in homes and perhaps more erratic freeze-thaw cycles. Even non-catastrophe claims have trended upward in severity – though interestingly, claim frequency (per 100 homes) has trended downward over some periods as higher deductibles discourage small claims insurance-research.org. Overall, however, total loss costs continue to rise as big events and higher repair costs outweigh any reduction in minor claims.

Fraud and Abuse: Another trend impacting claims frequency/cost is fraudulent or inflated claims. Insurers and the National Insurance Crime Bureau (NICB) have warned of schemes like “hail damage” contractor fraud – so-called storm chasers who canvas neighborhoods after hailstorms and sometimes induce homeowners to file questionable claims. These practices can inflate claim counts and costs, leading insurers to tighten scrutiny. Similarly, water damage fraud (unnecessary tear-out or false claims of damage) has been an issue, especially in some states. The industry is responding with more stringent claim investigations and, in some places, legal reforms (e.g. limiting unscrupulous contractors’ ability to directly bill insurers).

Regional Differences: Different parts of the country see different claim patterns. Coastal states (Florida, Gulf Coast) experience hurricanes and tropical storms, so wind/water claims (and litigation) are very prominent there. Plains states have more hail and tornado claims. Michigan and Ohio, as we’ll see next, face harsh winter-related losses and severe thunderstorms, but not coastal hurricane damage. Understanding these nuances helps insurers price risk and helps policyholders know what perils to fortify against.

National Claims Trends

Climate and Weather: In recent years, the insurance industry has faced surging catastrophe losses. The frequency and severity of storms are increasing, driving up claims for wind, hail, and water damage. For example, 2023 saw a marked jump in convective storm claims (thunderstorm, tornado, hail) due to unusually active weather. Insurers now almost expect $100B+ in U.S. disaster losses annually as a “new normal”reuters.com. Areas once thought low-risk are seeing more volatile weather (e.g. severe thunderstorms in the Midwest, extended freeze events in the South), catching homeowners off guard. Wildfire risk has also grown in the West, leading to unprecedented fire claims (2017–2018 California wildfires each topped $10–$13B insured). These trends are reflected in rising premiums and insurer wariness in high-risk regions.

Rising Claim Costs: The average cost per property claim has been climbing faster than inflation for decadesg. From 1997 to 2013, the average homeowners claim payout nearly tripled (from $2,676 to $8,787) – an ~7.8% annual increase, far above general inflation. Several factors drive this: homes are getting bigger and costlier to repair (the median new house is 21% larger than in 1997), building materials (like asphalt roofing) have become more expensive, and more intense weather means more severe damage. For example, roofing claims have ballooned due to both more frequent hailstorms and higher costs per roof (labor and materials). Water damage claims have grown with aging infrastructure in homes and perhaps more erratic freeze-thaw cycles. Even non-catastrophe claims have trended upward in severity – though interestingly, claim frequency (per 100 homes) has trended downward over some periods as higher deductibles discourage small claims. Overall, however, total loss costs continue to rise as big events and higher repair costs outweigh any reduction in minor claims,

Fraud and Abuse: Another trend impacting claims frequency/cost is fraudulent or inflated claims. Insurers and the National Insurance Crime Bureau (NICB) have warned of schemes like “hail damage” contractor fraud – so-called storm chasers who canvas neighborhoods after hailstorms and sometimes induce homeowners to file questionable claims. These practices can inflate claim counts and costs, leading insurers to tighten scrutiny. Similarly, water damage fraud (unnecessary tear-out or false claims of damage) has been an issue, especially in some states. The industry is responding with more stringent claim investigations and, in some places, legal reforms (e.g. limiting unscrupulous contractors’ ability to directly bill insurers).

Regional Differences: Different parts of the country see different claim patterns. Coastal states (Florida, Gulf Coast) experience hurricanes and tropical storms, so wind/water claims (and litigation) are very prominent there. Plains states have more hail and tornado claims. Michigan and Ohio, as we’ll see next, face harsh winter-related losses and severe thunderstorms, but not coastal hurricane damage. Understanding these nuances helps insurers price risk and helps policyholders know what perils to fortify against.

Michigan Property Insurance Claims

Michigan is a moderate-risk state for disasters overall – it has seen fewer federally declared disasters than many states (only 37 disaster declarations since 1958). It is not exposed to hurricanes or major earthquakes, and its tornado incidence is lower than parts of the Great Plains. Nevertheless, Michigan homeowners and businesses deal with plenty of property losses from more routine perils: especially windstorms, winter weather, and fire.

 

Top 5 Most Frequent Claims in Michigan

  1. Wind and Hail: By far the #1 cause of property claims in Michigan is windstorm and hail damage. Michigan’s location in the Great Lakes means exposure to severe thunderstorms, the tail end of Plains storm systems, and the occasional tornado. Roughly 75% of all Michigan home insurance claims are due to wind or hail events – a striking majority. This includes damage from high winds, microbursts, downed trees, and hail impacts (dents to siding, shattered windows, roof shingle damage). Michigan averages 15–20 tornadoes per year and many more severe wind events, so while not as tornado-prone as, say, Oklahoma, wind is still the dominant peril.

  2. Water Damage (and Freezing): A large share of the remaining claims (part of the other 25%) in Michigan are from water-related damage. Crucially, Michigan’s cold winters lead to frequent freezing pipes and ice dams. The state ranked 3rd in the nation for frozen pipe claims in recent years. In 2019, over 1,000 Michigan households had burst pipe damage totaling more than $23 million. Claims also arise from plumbing failures, appliance leaks, and basement sump pump backups (especially during spring thaws or heavy rains). Given Michigan’s many older homes and harsh freeze/thaw cycles, it’s no surprise water losses are common. (Notably, flood from external sources is excluded without special flood insurance; Detroit-area floods in 2021, for example, were largely uninsured except via the NFIP or endorsements.)

  3. Fire and Lightning: Fire claims are a significant concern in Michigan. While representing a small fraction of claims by number, fires account for a high portion of loss costs.  Causes range from accidental electrical fires, furnace/pellet stove mishaps, kitchen grease fires, to lightning strikes. Michigan’s woodsy areas and use of fireplaces add to fire risk. Lightning strikes are also noteworthy – in 2021 Michigan had 1,887 lightning claims, ranking among the top 10 states, with insured losses of $26.9 million from lightning that year. This shows that even though fire/lightning claims are relatively few, their impact is large.

  4. Other Property Damage (Vandalism, etc.): Vandalism and property damage claims happen in Michigan, though less frequently. These could include deliberate damage (broken windows, graffiti) or other hazards like tree falls not related to storms, weight of ice/snow collapses, power surge damages, etc. Michigan’s crime rate in some urban areas means theft/vandalism does occur. This category is part of that ~25% of claims not caused by wind/hail. For businesses, vandalism or civil commotion can be a concern (e.g. damage during a riot or break-in).

  5. Theft and Burglary: Theft claims are on the lower end of frequency in Michigan. Home burglaries have trended downward in recent years, but they still happen and lead to insurance claims for stolen property or damage caused by break-ins. On the commercial side, theft of copper wiring or break-ins at businesses contribute to property claims. Michigan’s insurance policies typically cover theft, and residents in higher-crime areas often file such claims. Overall, theft is a smaller slice of the pie (for homeowners, only a few percent of claims).

Insight: Michigan’s claim profile is heavily skewed toward weather-related damage. In fact, wind and hail claims make up about 3 out of 4 claims in the state. Michigan’s latitude means winter storm damage is common (blizzards, ice storms). For example, an ice storm can cause both wind damage (fallen trees) and water damage (ice dams on roofs). Residents also experience power outage-related losses (spoiled food, power surge damage), which sometimes are covered. Michigan’s relatively lower population density in rural areas might also mean fewer theft claims compared to highly urbanized states, but more claims for things like deer collisions (though auto, not property) or farm outbuilding damage (wind).

Top 5 Most Expensive Claim Types in Michigan

  1. Fire and Lightning: As in the national data, fire is the most expensive cause of property loss in Michigan on average. The typical fire claim payout is in the tens of thousands (often cited around $77,000 on average). Michigan’s housing stock includes many older homes with legacy wiring or heating systems, which can lead to fires that are costly to repair. Additionally, rural areas may have slower firefighting response, increasing damage. A single house fire can easily result in a total loss. Lightning strikes can cause structural fires or fry expensive electronics and HVAC systems. Because of the high severity, fire/lightning claims consume a disproportionate share of insurer payouts in Michigan.

  2. Wind and Hail: Wind/hail claims in Michigan average around $11,000–$12,000 per claim, similar to the national average. Many wind claims are for roof damage – replacing a roof or large sections of it can run $10k+. Hailstorms in Michigan, while not as extreme as in hail-belt states like Texas or Colorado, still cause significant damage to roofs, siding, and vehicles each year. For instance, severe thunderstorms in summer 2023 downed thousands of trees and damaged roofs across Southeast Michigan, leading to large insured losses. Tornado outbreaks (like an EF3 tornado in 2021 near Port Austin, MI) can generate costly claims in concentrated areas. Overall, windstorms are the biggest driver of aggregate losses in Michigan (due to how many claims they produce, even if each is moderate in cost).

  3. Water Damage and Freezing: Water claims in Michigan also average roughly $10,000–$12,000 each. However, certain water losses can be much higher – for example, if a pipe bursts while a family is on vacation, the entire home could flood. Claims from the 2021 Detroit-area sewer backup floods (while technically “flood” losses) sometimes reached into the tens of thousands for basement remediation. In commercial buildings, a sprinkler system break could cause extensive damage. It’s worth noting that many Michigan policyholders purchase sump pump/sewer backup riders due to the prevalence of basement flooding; those claims can be expensive and are often capped at a specified limit. Overall, water is a solid #3 or #2 in total dollars paid by insurers in Michigan, depending on the year’s weather.

  4. Other Property Damage: Miscellaneous property damage claims in Michigan tend to be lower severity (a few thousand dollars each). For example, vandalism claims might average under $5,000 (repairing broken windows, doors, etc.). Claims for things like snow load roof collapse or damage from falling trees (if not in a storm) can vary – minor instances might be a few thousand, while a barn roof collapse could be a major loss. On average, this category’s costs are lower than water or wind. But one interesting sub-category is vehicle impact into structures (e.g. a car crashes into a house or storefront) – these claims can be significant (and often the driver’s auto insurance may subrogate, which we discuss later).

  5. Theft: Theft claims in Michigan are generally the least costly on average – often around $4,000–$5,000 for homeowners. Stolen items are often limited to a few high-value pieces (TVs, electronics, etc.) due to policy limits on cash, jewelry, etc. Commercial theft could be higher if large amounts of stock are taken, but businesses often have alarms and other protections that limit losses. Notably, Michigan has a high number of auto thefts, but those fall under auto insurance, not property insurance. For property policies, burglary-related payouts remain relatively small compared to fire or weather losses.

Michigan Claims Trends

Winter Weather Impacts: Michigan’s climate trends show increasing variability, with some extremely cold winters (e.g. the 2014 polar vortex) causing spikes in freeze claims, and other milder winters reducing them. Overall, insurers have flagged Michigan as a hotspot for freeze losses – in one recent report Michigan was 3rd worst for frozen pipe claims, only behind Illinois and New York. As the state’s housing stock ages, water infrastructure failures(pipes bursting, sump failures) are a continuing issue each winter.

Severe Storms: While Michigan avoids coastal storms, it is experiencing more severe summer storms. In 2021–2023, Michigan had a series of intense thunderstorms with near-hurricane-force wind gusts, causing widespread damage and multi-day power outages. These events led to thousands of insurance claims for roof damage, spoiled freezer contents, power surge damage, etc. Insurers are noting that even non-tornado wind events are generating catastrophe-level losses in the Great Lakes region. Hail claims, though not as huge as in hail-prone states, do occur; Michigan residents, especially in the southeast and central areas, should not ignore hail risk (Michigan wasn’t in the top 5 states, but neighboring Illinois was, indicating the region sees significant hail)nicb.org.

Relatively Affordable Insurance (Until Now): Michigan’s history of moderate catastrophe frequency kept home insurance premiums somewhat below national average (Michigan’s average home premium was ~$1,835 in recent years, below the U.S. average). However, recent trends (storms, inflation) are pushing costs up (~19% increase in MI rates from 2018 to 2023). Insurers are warily watching Michigan’s weather trends and adjusting underwriting (e.g. requiring higher wind/hail deductibles or stricter maintenance requirements for older roofs).

Commercial Sector: In Michigan’s commercial insurance market, one trend is the concentration of risk in certain industries – e.g. auto manufacturing plants and suppliers in Michigan carry high fire/explosion risks (paint shop fires, etc.). A single factory fire can lead to massive claims, including business interruption. Insurers often conduct loss control inspections at such facilities to prevent costly incidents.

In summary, Michigan’s most common claims mirror the national patterns (wind, water, fire), with an extra emphasis on winter-related water losses and storm damage, and the absence of coastal perils. The claims environment is getting tougher as weather extremes test an aging housing stock.

Ohio Property Insurance Claims

Ohio, like Michigan, is a Midwestern state with no coastal exposure but a notable risk from severe thunderstorms and tornadoes. Ohio sits at the northeastern edge of “Tornado Alley.” It endures strong spring and summer storms, plus cold winters. The result is a claim profile not unlike Michigan’s, with wind, water, and fire dominating.

Top 5 Most Frequent Claims in Ohio

  1. Wind and Hail: Ohio’s most frequent property loss cause is windstorm damage, including tornadoes and hail. In recent history, Ohio has suffered some highly damaging wind events – notably the Memorial Day 2019 tornado outbreak in the Dayton area, where 21 tornadoes (one rated EF4) struck in a single night. That outbreak alone caused 30,000+ claims and around $465–480 million in insured losses in Ohio. On a routine basis, thunderstorms bring strong winds that rip off shingles or down trees every year. Hail is also a threat, especially in western and central Ohio. Large hail stones can pummel roofs and siding. Insurers report that wind/hail accounts for a significant portion of Ohio home insurance claims (comparable to the ~35% national share, and likely higher in storm-heavy years). Essentially, if it blows or hails, Ohioans will be filing claims.

  2. Water Damage (incl. Flooding/Freezing): Ohio homeowners frequently deal with water-related claimst. Heavy Midwest rains and flash floods can inundate basements (though flood is excluded from standard policies, many carry backup coverage). Snowmelt and rain can lead to leaky roofs or seepage. Additionally, frozen pipes in winter are an issue in Ohio’s climate. Much like Michigan, Ohio sees pipes burst in unheated crawl spaces or vacation homes during cold snaps. The frequency of interior water/plumbing claims is high – plumbers and restoration contractors stay busy in Ohio. Ensuring proper drainage (sump pumps, gutters) and heating helps, but water claims remain a top 2 cause in Ohio.

  3. Fire and Lightning: Ohio experiences its share of fire losses. Major metropolitan areas like Cleveland, Columbus, and Cincinnati each see numerous residential fires annually. In rural Ohio, barn fires or farmhouse fires also contribute. Electrical fires and accidental fires (cooking, candles) are common causes. Lightning from summer storms can directly ignite house fires or cause surges. A notable event was the 2014 polar vortex, when some Ohio homes caught fire as people used risky heating methods during power outages. Overall, fire claims are less frequent than wind or water, but they appear frequently enough to be a concern. Ohio insurers often rank fire as a top 3 cause of loss by cost. As a preventive note, many Ohio homes have older wiring (knob-and-tube or 60-amp service) which can be a fire hazard if not updated.

  4. Theft and Vandalism: Property crimes contribute to Ohio’s insurance claims, especially in urban centers. Cities like Cleveland and Cincinnati have neighborhoods with higher burglary rates, leading to theft claims for stolen personal property. Vandalism (broken windows, arson damage, graffiti) also results in claims for homeowners and businesses. While not as common as weather claims, theft/vandalism is a noticeable category. For businesses in Ohio, theft can be a top cause of loss – e.g. theft of tools from construction sites or burglars targeting retail stores. Statewide, theft is a smaller slice (similar to the 5% or less of claims nationally), but certain communities file a lot of such claims.

  5. Other Property Damage: Ohioans also see miscellaneous property losses: vehicle impacts (cars crashing into buildings) are not unheard of – for example, a car skidding on ice into a house. Smoke damage (from a neighbor’s fire or wildfire smoke drift) can occur. Tornado debris can damage property in unique ways (puncturing walls, etc.). These various mishaps form the remainder of claims. One item to highlight: Ohio, especially southern Ohio, gets remnants of hurricanes or tropical storms occasionally, bringing high winds and flooding (e.g. Hurricane Ike’s remnants in 2008 caused widespread wind damage in Ohio). Those events blur the line, but for categorization they fall under wind/storm claims. In summary, beyond the big four causes above, only a small percentage of Ohio claims fall into “other” categories.

Top 5 Most Expensive Claim Types in Ohio

  1. Fire and Lightning: As with the other regions, fire claims are the costliest on average in Ohio. A burned section of a home or business can easily run into high five- or six-figure repairs. Ohio has had some large fire losses – for instance, the 2015 Greater Cincinnati warehouse fire or occasional large apartment complex fires that result in total losses. The average fire claim payout (~$70k+) policygenius.com holds true in Ohio. Lightning-related fire losses, while less common, add to the severity. Insurers often face total-loss house fires in Ohio’s winter when wood stoves or space heaters malfunction – these leave little to salvage, making the claim near the policy limits.

  2. Wind and Hail: Windstorms in Ohio can cause very expensive claims when severe. While the average wind claim (~$11k) might involve partial roof replacement, a direct tornado strike is catastrophic. The 2019 Dayton-area tornadoes, for example, completely leveled some homes – resulting in full policy payouts (hundreds of thousands per home). That event drove the aggregate wind loss into the hundreds of millions. Even outside of catastrophes, Ohio’s many wind claims add up. Hail can devastate entire neighborhoods’ roofs and windows – insurance companies might spend tens of millions after a single large hailstorm in metropolitan Columbus or Cincinnati. On the commercial side, Ohio businesses have seen costly wind losses too (e.g. warehouse roof collapses). So while average costs are moderate, the potential upper end for wind losses in Ohio is very high.

  3. Water Damage and Freezing: Ohio water damage claims average in the low five figures, similar to Michigan. But a couple of specific scenarios can spike costs: basement flooding (if covered) can ruin furnaces, water heaters, and personal property – running well above average. Also, multi-story water leaks (like a burst pipe on an upper floor soaking a whole house) often lead to extensive restoration costs (tear-out, mold mitigation, etc.). In commercial buildings, a broken pipe over a weekend can soak offices or inventory, easily costing six figures. Ohio’s aging city infrastructure sometimes contributes: if municipal sewers back up (like past incidents in Northeast Ohio during heavy rains), claims for water backup surge. In short, water losses in Ohio are usually manageable but occasionally very costly.

  4. Other Property Damage: The average costs in this grab-bag category in Ohio are relatively low, but a few stand out. Vandalism claims (spray paint removal, minor repairs) are typically a few thousand dollars. However, deliberate property damage, like someone driving through a storefront, can cause large losses (structural repairs + lost business). Ohio has also seen cases of copper theft where thieves strip buildings of copper pipes/wiring, causing water damage and requiring costly repairs – insurers then face both theft and ensuing water damage costs. Another example: the 2012 derecho (a massive windstorm) that hit Ohio caused lots of tree damage and some structural collapse; while counted under wind, many of those claims were actually for things like tree removal and fence repairs (smaller costs). Summing up, “other” claims in Ohio generally aren’t as financially severe as the big perils.

  5. Theft: Theft/burglary claim severity in Ohio is on par with national figures (~$4–5k average). Stolen electronics or valuables rarely exceed policy sub-limits. One area that can raise theft claim costs is commercial burglaries – for instance, thieves stealing high-value items (jewelry store robbery, equipment theft from contractors). Those can be large, but they’re less common. On the personal side, identity theft or credit card fraud losses may be covered in some policies (often minimal amounts though). Overall, theft is one of the least costly (to insurers) claim types in Ohio. The bigger concern from theft is often the personal trauma and inconvenience to the homeowner rather than the dollar amount.

Ohio Claims Trends

Tornado and Storm Cycles: Ohio has noticed cycles of severe weather. The late 2010s saw a spike in tornado activity (2019 being especially bad). Insurers and the Ohio Insurance Institute have highlighted that the Memorial Day 2019 outbreak was one of the state’s largest insured loss events ever for property. Such events drive up the loss ratios for insurers and can lead to regional premium hikes. Ohio’s northern location means it also gets fringes of tropical systems (e.g. remnants of Hurricane Ike in 2008 caused wind damage across Ohio, leading to many claims). There’s an expectation that severe convective storms will continue to pose major risks. Indeed, climate data suggests the Midwest is seeing more volatile storm patterns, so Ohio is bracing for potentially higher storm losses going forward.

Urban vs Rural: Ohio has a mix of big cities and rural areas, and claim trends can differ. Urban areas (Cleveland, Toledo, etc.) see more theft and vandalism claims, while rural areas see more weather and fire claims (and claims may be higher if volunteer fire departments have longer response times). One noteworthy trend: meth lab explosions or similar illicit activities in some rural parts of Ohio have caused home fires/explosions – a troubling cause of loss that insurers have encountered (fortunately not extremely common, but notable in claims files).

Insurance Market: Ohio’s property insurance market is somewhat more stable than coastal states, but it isn’t without challenges. The state’s combined loss ratios for home insurance have fluctuated with storm activity. In years with few catastrophes, insurers do well, but one or two big storm outbreaks can tip the results into underwriting losses (for example, 2019’s storms strained many insurers). As a result, insurers in Ohio have been tightening policy terms – higher wind/hail deductibles are now seen in some policies, and there’s more careful underwriting of older homes (for fire risk, roof condition, etc.). So while Ohio premiums remain relatively affordable compared to high-risk states, the gap may close if severe weather keeps causing large losses.

Preventive Measures: Many Ohio homeowners now invest in sump pump systems, backup generators, and fortified roofing after learning from recent events. The state and insurers also promote tornado safety (safe rooms, better construction) to reduce total losses. These measures aim to mitigate future claims.

Overall, Ohio’s most frequent and costly claims align with the broader Midwest experience: wind and water are the big recurring threats, and fire is the ever-present danger that, when it strikes, costs a lot.

Insurance Claims and Litigation Trends

Beyond the raw frequency and cost of losses, it’s important to understand how insurance claims are being handled and disputed. In recent years, several litigation trends have emerged in property insurance. We highlight a few key areas: bad faith claim handling disputes, appraisal clause invocations, and subrogation actions. These issues arise nationally, and to some extent in Michigan and Ohio, so we’ll note any state-specific context.

Bad Faith Claim Disputes

When an insurance company allegedly mishandles a claim – for example, unreasonably denying coverage, delaying payment, or offering far less than the claim is worth – the policyholder may accuse the insurer of bad faith. “Bad faith” is a legal cause of action in most U.S. states, either under statutes or common law. Essentially, insurers have a duty to deal fairly and in good faith with their insureds, and violating that duty can expose them to lawsuits beyond just the contract claim.

  • Nationally: Bad faith lawsuits are common in property insurance, especially after large catastrophes. Policyholders who feel their insurer “low-balled” a claim or wrongly denied it often seek legal counsel. Some insurers have been criticized for a “delay, deny, defend” approach – dragging out claim investigations or denials to wear down claimants. Courts can penalize such conduct with extra-contractual damages, including punitive damages in egregious cases. For example, after recent wildfires and hurricanes, insurers in some cases faced bad faith claims for allegedly refusing to pay legitimate losses or using unclear policy language to deny coverage.

  • Michigan: Historically, Michigan law did not allow punitive damages for first-party bad faith (no separate tort of bad faith), but it does penalize late payments via the Uniform Trade Practices Act (UTPA). Under Michigan’s UTPA, an insurer that fails to pay a property claim on time owes 12% annual penalty interest on the overdue amount. This puts financial pressure on insurers to promptly pay meritorious claims. Recently, there have been moves to strengthen bad faith remedies – a 2023 Michigan bill proposed creating a statutory bad faith cause of action against insurers who don’t timely pay claims. If enacted, this would allow Michigan policyholders to sue for bad faith damages in addition to the interest penalty. As of now, Michigan claimants primarily rely on the interest penalty and general contract law (plus regulatory complaints) to address unfair claim handling.

  • Ohio: Ohio, by contrast, recognizes bad faith in insurance as a tort. The Ohio Supreme Court has long held that if an insurer refuses to pay a claim without reasonable justification, it can be liable for damages beyond the policy (including possibly punitive damages). Thus, Ohio policyholders have leverage to sue if they believe an insurer acted with malice or fraud in denying a claim. For instance, after the 2019 tornadoes, some Ohio homeowners who felt their insurers unjustly refused full roof replacements (insisting on patch repairs) filed complaints and could pursue bad faith claims if insurers’ conduct was found willfully improper. Ohio’s bad faith landscape means insurers must be cautious and thorough in handling claims to avoid litigation. There is an incentive for insurers to settle disputes or engage in appraisal (see below) rather than risk a court finding of bad faith.

In summary, bad faith litigation remains a major concern for insurers. It’s a tool for policyholders to ensure they are treated fairly, but it also contributes to legal costs and sometimes protracted court battles. Both Michigan and Ohio have seen their share of dispute-after-disaster scenarios where homeowners sue over claim handling (e.g. delayed payments after a tornado or denial of a fire claim due to an alleged misrepresentation). The trend is toward greater accountability: courts and legislatures are reinforcing that insurers must promptly pay or justify non-payment, or face consequences.

Appraisal Clause Disputes

Nearly all property insurance policies contain an appraisal clause – an alternative dispute resolution mechanism used when the insurer and insured disagree on the amount of loss (the value of the claim). Either party can typically invoke appraisal, whereby each selects an independent appraiser, and those appraisers (or an umpire if they disagree) determine the amount of damage. In theory, this is faster and cheaper than litigation. In practice, appraisal has itself become a hotly contested area in some cases, leading to litigation about when and how appraisal should apply.

  • Use of Appraisal: Appraisal is meant to resolve valuation disputes, not coverage questions. For example, if an insurer agrees a loss is covered but offers $10,000 and the homeowner’s contractor estimates $30,000, either side can demand appraisal to settle the difference. The process is like arbitration for the scope and price of repairs. In Ohio, as one Allstate spokesperson explained after the 2019 tornadoes: if the homeowner and insurer “are not in agreement on the covered damages, the homeowner can request an appraisal” – each party picks an appraiser, and if they can’t agree, an umpire decides – after which “a decision about the covered damages” is reached. Many Ohio tornado victims invoked appraisal to fight for full roof replacements, for instance.

  • Michigan’s Appraisal Law: Michigan actually embeds the appraisal right in statute for fire insurance policies (the standard policy language via MCL 500.2833(1)(m)). So if there’s a fire loss in Michigan and a dispute over amount, appraisal can be invoked by either side by law. Michigan courts generally uphold appraisal awards as binding on the loss amount, barring fraud or mistake. However, there have been court cases in Michigan about causation vs. amount – i.e., if the insurer says damage was not caused by a covered peril, is that a coverage dispute (not subject to appraisal) or an amount dispute? Michigan tends to say causation is for the courts, amount of loss is for appraisers. This nuance can lead to litigation if parties don’t agree on what issue is being appraised.

  • Trends: In recent years, some insurers nationally grew concerned about appraisal abuse – situations where public adjusters or attorneys invoke appraisal and get very high awards. This has led some insurers to initially deny claims to force a narrower dispute, or conversely, to try to compel appraisal to avoid jury trials. We’ve seen litigation where one party refuses to proceed to appraisal and the other files a motion to compel it. Generally, courts favor enforcing appraisal clauses as written in the policy (since it’s a contractual right). Both Michigan and Ohio courts have compelled unwilling insurers or insureds to go to appraisal in various cases, to speed resolution.

  • Example: After the Dayton tornadoes in Ohio, some homeowners filed complaints that insurers were only partially paying for roof damage. In response, those insurers (like the Allstate example) often offered appraisal as a remedy rather than litigation. This shows how appraisal is a double-edged tool: it can avoid a lawsuit, but if not handled properly, it can still lead to post-appraisal litigation (say, if a party thinks the appraisal award was obtained improperly).

Bottom line: The appraisal process remains a common and generally effective way to resolve amount disputes in property claims. However, disputes about appraisal itself – such as timing (when can you invoke it), scope (what issues can appraisers decide), and fairness (choosing impartial appraisers) – have become a niche litigation area. Policyholders should be aware of the appraisal option as a way to contest a low claim offer, and insurers likewise use it to cap their exposure by getting a neutral valuation. Michigan and Ohio both uphold appraisal rights, and policyholders in those states do exercise them (with Michigan having it codified for fire losses).

Subrogation and Recovery Actions

When an insured loss is caused by a third party, insurance companies often pursue subrogation – the process of recovering the claim payout from the responsible party. Subrogation doesn’t directly involve the policyholder in litigation (aside from cooperation), but it’s a significant legal aspect of property claims that insurers handle behind the scenes. Trends in subrogation reflect the types of losses happening and evolving legal theories.

  • Common Subrogation Scenarios: Many property losses have a potential third-party culprit. For example:

    • A cooking fire in a restaurant might be due to a defective stove – the insurer pays the claim, then sues the stove manufacturer for product liability.

    • A pipe bursts and floods a home, and it turns out a plumbing contractor’s negligence caused it – the insurer may subrogate against the contractor.

    • An automobile crashes into a building (store or home) causing structural damage – the property insurer will pay the owner, then recover from the driver’s auto insurer.

    • In large fires, if evidence shows faulty wiring or a malfunctioning appliance started it, insurers often pursue the electrician or appliance maker for reimbursement.

    • For example, after a 2021 house fire in Michigan traced to a refrigerator defect, the homeowners insurer paid the claim and then filed a subrogation suit against the refrigerator manufacturer.

  • Trends Nationally: Subrogation is becoming more data-driven and aggressive. Insurers use forensic experts to pinpoint causes of fires, collapses, etc., to identify responsible parties. One notable trend is wildfire subrogation – after massive wildfires (like in California), insurers have successfully subrogated against utility companies whose downed power lines ignited fires, recovering billions. This primarily affects western states, but it shows how subrogation can significantly offset insurer losses (and also influence public utilities’ practices).

  • Michigan/Ohio: Both states allow subrogation generally, and there aren’t unique barriers beyond general law. Michigan has an interesting twist in auto insurance (no-fault auto law limits subrogation for auto accidents except in certain cases), but for property it’s straightforward. Ohio likewise permits subrogation claims; for instance, Ohio insurers might subrogate against a contractor or builder if a structural failure caused a loss (there was a case of an Ohio church roof collapse where the insurer went after the engineering firm). A key aspect is that sometimes contracts include waivers of subrogation – for example, many construction contracts require parties to waive subrogation against each other for any insured losses. Insurers have to navigate these provisions; some litigation in Ohio and elsewhere has centered on whether a waiver of subrogation in a lease or contract bars the insurer’s recovery. Generally, courts enforce clear waivers, which can limit subrogation in commercial contexts.

  • Subrogation Recoveries: A successful subrogation can return a large portion of paid claims to the insurer (and often the policyholder’s deductible is returned to them as well). This is economically important, especially for large losses. For example, if an insurer paid a $1,000,000 factory fire claim and then proves a machine manufacturer was at fault, they might recover $800,000, mitigating the overall cost of that claim. Both Michigan and Ohio insurers actively pursue such recoveries. In the 2019 Dayton tornadoes case, while no human “caused” the tornado, subrogation still came into play for auto claims (auto insurers recovering from other drivers who caused crashes during the storm, etc.) and in some borderline cases (one insurer tried to subrogate against a construction company for debris that became projectiles – a creative but not common angle).

Trend: One notable legal trend is subrogation vs. government entities. Governments are often immune from liability (so if a city’s tree falls on a house, the city might be protected by sovereign immunity – the insurer can’t recover). Insurers have occasionally lobbied for exceptions when negligence is clear, but generally, subrogation is limited to private parties. In both Michigan and Ohio, governmental immunity can block subrogation (e.g., can’t easily sue the county for a sewer backup that floods homes, absent gross negligence).

In summary, subrogation litigation is the behind-the-curtain effort where insurers step into the shoes of their insureds to hold third parties accountable. It doesn’t directly involve the policyholder (except they might get their deductible back if the suit succeeds), but it’s a significant part of the property insurance ecosystem. A trend to note is that subrogation claims can sometimes produce precedents (e.g. clarifying product safety standards or contractor liability) that feed back into loss prevention – for instance, if lots of fires are caused by a certain appliance, subrogation cases might prompt a recall, ultimately reducing future claims.

Other Litigation Trends

Beyond the big three areas above, a few other legal trends in property insurance are worth mentioning:

  • Coverage Disputes: There’s been an uptick in lawsuits over whether certain damages are covered. Examples include disputes over concurrent causation (e.g., wind vs. flood in a hurricane – was the loss from a covered wind peril or excluded flood?), or whether mold damage is covered (some policies have strict limits). In Michigan and Ohio, flood is generally excluded, so after heavy rains, lawsuits sometimes revolve around whether water came through a covered opening (wind-created opening, thus covered) or simply seeped (thus excluded flood). These cases can set important precedents.

  • “Matching” Issues: A common dispute is whether the insurer must replace undamaged items to match the new materials. For instance, if half of a roof is damaged by hail, policyholders often demand a full roof replacement so the shingles will match. Insurers sometimes only want to pay for the half. Some states (notably Florida) have laws about matching. Michigan and Ohio don’t have specific statutes, but policy language and insurance department bulletins may guide matching. Litigation over matching (shingles, siding, flooring) has occurred in both states – often, courts lean toward requiring a reasonable uniform appearance, but outcomes vary. This issue drives many appraisal demands and complaints.

  • Assignment of Benefits (AOB) and Contractors: While more of an issue in places like Florida, the trend of contractors taking assignment of claim benefits and suing insurers directly has been noted. In Michigan/Ohio, AOBs are less prevalent but do occur (e.g., a roofing contractor might get an assignment to deal directly with the insurer). Some insurers litigate the validity of these assignments if they suspect price inflation. States have started regulating AOB practices due to abuse (Florida passed major reforms). Michigan and Ohio watch these developments, though they haven’t faced a crisis level of AOB litigation.

  • Fraud Investigations: Insurers in Michigan and Ohio, as elsewhere, sometimes deny claims for fraud (e.g., arson for profit). Those denials can lead to legal battles if the insured contests it. For instance, if a house fire is ruled an arson and the insurer denies the claim accusing the homeowner of setting it, litigation may ensue to determine if the denial was proper. These cases are complex (often involving forensic evidence, even criminal proceedings). Both states have seen high-profile cases (Michigan in particular had issues with suspected auto-related arson fraud, and some spill into property).

  • Regulatory Actions: The state insurance departments in Michigan and Ohio can also play a role. After major disasters, they sometimes issue bulletins encouraging fair claims handling. In Ohio, following the 2019 tornadoes, the Insurance Department monitored complaints and ensured companies were responding. In Michigan, the Dept. of Insurance and Financial Services (DIFS) can fine insurers for unfair claim practices. While not litigation in court, these regulatory actions are part of the broader claims legal landscape.

In conclusion, the world of property insurance claims is not just about dollars and cents of damage – it’s also shaped by how claims are handled and resolved. Bad faith law, appraisal rights, and subrogation claims are three pivotal areas ensuring that:

  • Insurers treat customers fairly (or face penalties),

  • Both sides have a mechanism to resolve value disputes without full litigation, and

  • Parties responsible for damage ultimately pay (helping keep insurance costs in check).

Both Michigan and Ohio generally follow national norms in these areas, with a few local twists (Michigan’s interest penalty and pending bad-faith statute; Ohio’s established bad-faith tort and recent experiences after tornadoes). The overarching trend is toward increased scrutiny on insurers’ claim practices (by courts, legislators, and regulators) and towards finding ways to settle claims efficiently (through appraisal or mediation) to avoid protracted fights.

For policyholders, the takeaways are: know your rights in a claim (you can dispute amounts, you can escalate unfair treatment), and for insurers: handle claims proactively and fairly to minimize litigation exposure. The result should be a claims process that, even as losses mount from expensive disasters, remains as equitable and efficient as possible for all involved.

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