With costs rising nationwide, more than six million homeowners are reportedly skipping home insurance, for a total of $1.6 trillion worth of unprotected homes.
A new study from the Consumer Federation of America, an association of nonprofit consumer organizations, finds that 7.4 percent of homeowners don’t have insurance, putting them at serious risk if their homes are damaged. Uninsured rates are much higher for Black homeowners (11%) and Hispanic homeowners (14%).
High rates of uninsured homeowners are found in many rural areas, but some large cities, including Miami and Houston, also have high rates of 15% and 10%, respectively.
The rising cost of home insurance is likely driving more and more people to go without home insurance.
According to the study, based on 2021 census data, the percentage of uninsured homeowners has increased since 2019, when 6.5% had no coverage. The researchers predict that the percentage of uninsured homeowners will increase even more due to “increasing home insurance premiums and insurance companies abandoning disaster-prone states altogether.”
According to Guaranteed Rate Insurance, a national brokerage, the national average annual cost of home insurance rose to $1,723 in 2023, up from $1,276 in 2021. Insurance companies say they are raising premiums because they face claims expensive due to major disasters, while the cost of home repairs has skyrocketed with inflation.
Why Homeowners Skip Insurance
Home insurance is a requirement for Americans with mortgages. However, it is equally important for homeowners who do not have mortgages to obtain insurance, even if it is not required.
If a disaster strikes, homeowners who don’t have insurance risk falling into serious debt or being forced to live in an unsafe home with a problem like a damaged roof, for example. FEMA assistance grants can provide some relief, but are only available after declared disasters.
In the worst case scenario, you could find yourself with no ability to pay hundreds of thousands of dollars in repairs after a disaster, Sharon Cornelissen, director of housing at CFA, said in a statement.
Americans who skip home insurance are often low-income homeowners in financial trouble. The report found that 15% of homeowners earning less than $50,000 a year are uninsured, compared to just 3% of homeowners earning $150,000 or more.
“Many consumers are struggling to afford rising premiums and having to forgo homeowners insurance,” Cornelissen said. “This puts them at risk of losing everything. A storm or fire means they have to go into heavy debt to repair their home, live in unsafe and inadequate housing or even become homeless.”
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