Homeowners Insurance Is So Expensive That People Are Opting Out
More than 6 million homeowners don’t have homeowners insurance.
Premium increases for homeowners insurance are due to years of big losses along with inflation and supply chain disruptions raising costs to fix damaged homes. Higher premiums are putting a strain on households already struggling to afford the cost of living. Low-income homeowners and homeowners of color are at the greatest risk to go without homeowners insurance.
A recent study by the Consumer Federation of America found that 7.4% of all properties in the US are uninsured valued at $1.6 trillion in unprotected assets which includes $339 billion of uninsured Hispanic-owned homes. This is the highest level of uninsured homeowners and it is because of the dramatic spike in the cost of coverage.
Mortgage lenders generally require the property to be insured. If the homeowner stops paying for coverage or lets the policy expire, the mortgage lender is allowed to buy insurance and charge the homeowner for it. This is called force-placed insurance or lender-placed insurance and only protects the lender, not the homeowner. The cost to the homeowner can be twice as much as they’d regularly pay for insurance.
A study conducted by The Consumer Federation of America found homeowners who make less than $50,000 a year are twice as likely as the general population to go uninsured. The same study shows that 14% of Hispanic homeowners have no homeowners insurance. Older Hispanic households are also at a higher risk of being uninsured.
There are several steps homeowners can take to try to lower their homeowners insurance.
Bundle home insurance with auto insurance or another policy
Increase the policy deductible and ask for discounts
Shop around as soon as you get a non-renewal notice
Find an experienced insurance broker who can advise and access different options
Reduce the risk of your home being damaged or destroyed in a disaster.