A couple in the Gulf Coast community of Steinhatchee, Florida, board up their house in preparation for Hurricane Idalia on Tuesday. Chandan Khanna/AFP via Getty Images
Hurricane Idalia intensified Tuesday as it approached the Gulf Coast of Florida. Given that, recent reporting in The Wall Street Journal caught our eye. Its headline: “Americans Are Bailing on Their Home Insurance.”
The Journal reported that some 12% of homeowners are choosing not to carry insurance. That could be a bit of an issue if they need to rebuild after their home is damaged or destroyed.
If you have a mortgage, you’re required to have homeowners insurance, but that’s not the case if your house is paid off. Most people still do, noted Loretta Worters at the Insurance Information Institute. But the number of those who don’t is rising.
“You have about 88% of people that do carry it, as opposed to a few years ago where it was about 92% to 95% of people that had homeowners insurance,” she said.
Of those who go without insurance, nearly half make less than $40,000 a year. And with coverage getting a lot more expensive — especially in disaster-prone states like Florida and California — people are struggling to afford it.
“This generally tends to be people that are older in life or retirees, and they have to make decisions about what they can afford,” said Craig Fugate, a former administrator of the Federal Emergency Management Agency.
When people have to choose between keeping the lights on, buying food and medicine and paying their homeowners premium, insurance is one of the first things to go, Fugate added.
A lot of people also assume that if something does happen, the federal government will step in and help. “That’s a very dangerous financial mistake,” he said. “The federal government is not designed to do that.”
Home insurance is key to recovering from a disaster, per Carolyn Kousky at the Environmental Defense Fund.
“Households with insurance recover better, recover faster, have lower financial burdens post-disaster,” she said. “We also have research showing that as more people in a community have insurance, the local economy recovers faster as well.”
But with climate change making extreme weather more common and insurers facing mounting losses, we’re at an inflection point, according to Amy Bach at the consumer advocacy nonprofit United Policyholders.
“With the private sector behaving like private, for-profit companies do —which is moving out of areas that they don’t think they’re going to make money in — the imperative is on public agencies, public officials to come up with some new concepts,” she said.
Because, Bach added, it’s in everyone’s interest for people to be able to afford to buy homes and protect them.
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FAQs
A recent study from the Insurance Information Institute found 12% of Americans no longer have home insurance, up from 5% in 2019. It's the highest level of uninsured homeowners the industry-funded research group has seen, and follows a dramatic spike in the cost of coverage.
Why don't people have home insurance? ›
Most uninsured homeowners are those who have paid off their mortgage and are no longer required to have insurance. Among those who own their home outright, the CFA estimates roughly 14 percent are uninsured, with low-income and minority homeowners especially at risk.
Why is it so hard to get homeowners insurance? ›
Living in a high-risk location, having hazardous home features, home maintenance issues, your home's history of insurance claims, and more can be reasons an insurance company may determine a house to be uninsurable.
How much does the average American spend on home insurance? ›
According to data we obtained from Quadrant Information Services, the national average cost of home insurance coverage is $2,511 per year for a standard homeowner in the United States. The rate that you will actually pay depends on a variety of factors that indicate how risky you and your home will be to insure.
Is it smart not to have homeowners insurance? ›
Home insurance is typically required by mortgage lenders. Not having insurance can be a disaster, even when there's no lender involved. Without home insurance, a property owner might have to pay out of pocket to replace all of their property -- including their house.
What percentage of Americans are not covered by insurance? ›
States With The Highest/Lowest Uninsured Rates
| Rank | State | % in last week of survey |
|---|
| 18 | California | 8.7% |
| 19 | Arizona | 8.5% |
| 20 | Oregon | 8.4% |
| 21 | South Carolina | 8.3% |
47 more rowsMar 26, 2024
If you don't have homeowners insurance, you may find yourself unable to repair or replace your home if something were to go wrong. In a worst case scenario, you could also lose your home.
Is homeowners insurance worth it? ›
In the end, homeowners insurance isn't something you'll feel forced to have – it will be something you'll want to have. Homeowners insurance is the best financial defense against bad things that may happen in life, giving you much-needed peace of mind.
Do wealthy people have home insurance? ›
Therefore, the wealthy may have to purchase larger amounts of insurance because they may be liable for payments commensurate with the value of their total wealth, and not necessarily limited to the value of the property insured.
What do you do if you can't get home insurance? ›
You can also check with your state's Department of Insurance to see which companies are available in your area.
- Consider a FAIR plan. ...
- Get modified coverage. ...
- Take out a surplus line policy. ...
- Work on your improving your credit.
Avoid admitting fault or underestimating damages as this might lead to lower compensation or even denial of your claim. Honesty is crucial when dealing with an insurance adjuster, so avoid providing false information which can lead to serious consequences like claim denial or legal repercussions.
What happens if your home is uninsurable? ›
If serious issues exist with the home or property, the FHA will consider the home uninsurable. Borrowers would need to contact private insurers to cover the property, or a 203K loan could be used to make the necessary repairs. U.S. Housing and Urban Development.
How much is homeowners insurance on a $600000 house? ›
On average, homeowners will have to pay around $4,140 annually, or $345 monthly, for Homeowners Insurance on a $600,000 home. Your premium will be based on, firstly, the coverage total and, secondly, your policy structure.
What is the biggest cause of homeowners insurance losses? ›
What are the most common home insurance claims?
- Wind & hail (39.4%)
- Fire and lightning damage (24.8%)
- Water damage & freezing (23.5%)
- All other property damage (9.4%)
- Bodily injury or property damage to others (1.8%)
- Theft (0.7%)
- Medical payments and other causes (0.5%)
- Mitigate your risk to save your home & your money.
52% of Americans have a life insurance policy. 30% of Americans say they need life insurance but don't have it yet. More than 100 million Americans are uninsured or underinsured when it comes to life insurance.
What percentage of American homeowners do not have a mortgage? ›
Not only is 96% of mortgage debt in the U.S. fixed rate, but 38.5% of homeowners don't have a mortgage at all.
Is home insurance mandatory in the US? ›
A: Home insurance isn't required by law, but there are other reasons to insure your home. If you have a mortgage on it, your lender will require you to have insurance until the loan is paid off. In fact, lenders can legally force borrowers to carry insurance to cover the amount of the mortgage.
What percentage of the American households have purchased life insurance? ›
Key Life Insurance Statistics
A study by the LIMRA and Life Happens shows that in 2023, the percentage of people who reported having life insurance increased to 52%, up from 50% in the previous year. Over the past 12 years, there has been a decrease in overall life insurance ownership, dropping from 63% in 2011.
