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What Millions of Homeowner’s Insurance Contracts Reveal About Risk Sharing

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Abstract

Housing is the largest component of assets held by households in the United States, totaling $48 trillion in 2025. When natural disasters strike, the resulting damage to homes can be large relative to households’ liquid savings. Homeowner’s insurance is the primary financial tool households use to protect themselves against property risk. Despite the economic importance of homeowner’s insurance, we know surprisingly little about how insurance contracts are actually designed with respect to property risk. In this post, which is based on our new paper, “Economics of Property Insurance,” we examine how homeowner’s insurance contracts are structured in practice. Using a new granular dataset covering millions of homeowner’s insurance policies, we document four striking patterns about coverage limits, deductibles, insurance pricing, and the distribution of property losses.

Suggested Citation

  • Hyeyoon Jung & Jaehoon (Kyle) Jung, 2026. "What Millions of Homeowner’s Insurance Contracts Reveal About Risk Sharing," Liberty Street Economics 20260413, Federal Reserve Bank of New York.
    • Handle: RePEc:fip:fednls:103025
    DOI: 10.59576/lse.20260413
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    JEL classification:

    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • G1 - Financial Economics - - General Financial Markets
    • G2 - Financial Economics - - Financial Institutions and Services
    • G3 - Financial Economics - - Corporate Finance and Governance

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