"With the cost of owning a home in America skyrocketing?sale prices, local property and school taxes, energy costs and, now, interests rates on the rise?the moderation in home insurance costs couldn't come at a better time for homeowners," he added.

Mr. Hartwig said some increase in the cost of homeowners insurance reflects choices made by consumers themselves. "Over the past several years, millions of families took advantage of near-record low interest rates, purchased larger homes, or made additions and improvements to their existing homes in record numbers," he said. "Bigger, newer and upgraded homes cost more to insure simply because they're more expensive to rebuild or repair," he added.

Approximately 41 million homeowners have added to or improved their homes between 2001 and 2002. In 2001, the most recent year for which annual figures were available, an estimated $166 billion was spent on home improvements, I.I.I. said.

Mr. Hartwig noted that homeowners need to make sure these added costs are reflected in their coverage or risk being underinsured.

"Insurers are now protecting more homes at greater value that at any time in history, helping propel the homeownership rate to an all-time record high of 68.3 percent in 2003?a figure substantially influenced by record numbers of minority buyers," Mr. Hartwig said.

I.I.I. noted that losses are the most important driver of homeowners insurance premiums. Between 1990 and 2002, home insurers paid out, on average, $1.17 in losses and expenses for every $1 they earned in premiums, according to the I.I.I.

Between 2000 and 2002 alone, homeowners insurers paid out an estimated $13.5 billion more in claims than they collected in premiums, rivaling the $15.5 billion in insured losses from Hurricane Andrew?still the most expensive natural disaster in history in terms of insured losses.

By last year, I.I.I. said, results improved substantially, with insurers paying out an estimated $1.03 for every dollar earned. The organization said that during the 1990s, the severity of catastrophes began to increase dramatically. Since 1990, insurers have paid out more than $120 billion in catastrophe-related losses.

I.I.I. noted that last year the industry was hit with three billion-dollar-plus disasters, including the California wildfires ($2 billion) and Hurricane Isabel ($1.7 billion). Altogether, insured natural disaster losses totaled nearly $13 billion in 2003, the third-highest year on record. Mold-related claims had also become a multibillion-dollar problem by 2002.

"Homeowners insurance rates in some parts of the country continue to rise because of the extraordinary costs associated with paying these catastrophic claims," Mr. Hartwig said. "In fact, virtually every part of the country is either at risk of or has experienced a billion-dollar disaster."

While the typical American homeowner will pay $608 for home insurance this year, rates do vary significantly from one part of the country to another. Mr. Hartwig pointed out that many homeowners in coastal regions vulnerable to devastating storms assume a larger portion of the risk through higher deductibles?usually a percentage of the insured value of the home.

I.I.I. warned that underinsurance is a "chronic problem'' among homeowners.

Because a home is the most valuable asset most people will ever own, I.I.I. said it is surprising that nearly two-thirds (64 percent) of all homes in America are underinsured by an average of 27 percent.

The institute said insurers are working to address this problem in a variety of ways, including calculating insured value by looking at a home's individual components rather than the traditional square-footage methods.

I.I.I. said insurers are also advising policyholders to purchase inflation-guard endorsements on their policies, which automatically adjust the amount of insurance purchased each year to reflect increases in local building and reconstruction costs.

To view a bar graph of home insurance rate increases, obtain additional information on homeowners insurance or to view the I.I.I. announcement in full, access the I.I.I.'s website at www.iii.org.
The I.I.I. is a nonprofit communications organization sponsored by the property/casualty insurance industry.