As Home Insurance Costs Soar, 6 Million Owners Decide to Skip Coverage Altogether
- 5 Tips to Help You Save Money on Soaring Car Repair Costs
- Airlines Must Give Cash Refunds for Canceled Flights Under New Rule
- True or False? Gas Prices Always Fall During Election Seasons
- The Surprising Way Inflation Can Be Good for People With Debt
- The Cost of Buying a House Reaches a New Record High
- Here’s Why a Gas Tax Holiday Isn't as Great as It Sounds
- Gas Prices Are Over $4 in Every State for the First Time
- 7 Strategies People Are Using to Combat High Gas Prices
- Gas Prices Just Passed $6 in a Major U.S. City for the First Time Ever
- Your State Taxes on Groceries, Income, Gas and More Could Soon Be Slashed
As costs rise nationally, more than six million homeowners are reportedly skipping home insurance, which adds up to a total of $1.6 trillion worth of unprotected houses.
A new study by the Consumer Federation of America, an association of nonprofit consumer organizations, finds that 7.4% of homeowners don't have insurance, leaving them exposed to major risks if their homes become damaged. Uninsured rates are much higher for Black homeowners (11%) as well as Hispanic homeowners (14%).
High rates of uninsured homeowners are seen in many rural areas, but specific major cities including Miami and Houston also have elevated rates of 15% and 10%, respectively.
The rising cost of home insurance is likely causing more people to go without home insurance.
According to the study, which is based on 2021 Census data, the percentage of uninsured homeowners has increased since 2019 when 6.5% lacked coverage. The researchers forecast that the share of owners without insurance will jump even higher due to "escalating home insurance premiums and insurance companies leaving disaster-prone states altogether."
The national average annual cost of home insurance climbed to $1,723 in 2023, up from $1,276 in 2021, according to Guaranteed Rate Insurance, a national brokerage. Insurance companies say they’re increasing premiums because they're facing costly claims from major disasters while the cost of home repairs has soared with inflation.
Why homeowners are skipping insurance
Home insurance is a requirement for Americans with mortgages. However, it’s equally important for homeowners who don’t have mortgages to get insurance, even if it’s not required.
If a disaster hits, homeowners who don’t have insurance risk going into major debt or being forced to live in an unsafe dwelling with an issue like a damaged roof, for example. FEMA assistance grants can provide some relief, but they're only available after declared disasters.
In the worst case scenario, you could be left with no way to pay for hundreds of thousands of dollars of repairs after a disaster, Sharon Cornelissen, director of housing at the CFA, said in a release.
Americans who skip home insurance are often lower-income homeowners struggling financially. The report found that 15% of homeowners earning less than $50,000 per year are uninsured, compared to just 3% of owners earning $150,000 or more.
“Many consumers are struggling to afford rising premiums and must go without homeowners insurance,” Cornelissen said. “That puts them at risk of losing everything. One storm or wildfire means they have to go into deep financial debt to repair their home, live with unsafe and inadequate housing, or even become homeless.”
More from Money:
7 Best Homeowners Insurance Companies of February 2024
More People Are Skipping Home Insurance to Save Money — and It Could Backfire
Home Insurance Prices Are Soaring — Especially in These 5 States