Homeowners Are Starting To View Insurance As A Luxury Amid Skyrocketing Rates

We recently explored the harsh reality of rising home costs, but the list price is only one piece of the equation when it comes to buying and maintaining a home.

Another important aspect is homeowners insurance — and with rates continuing to increase nationwide, many Americans are either unable or unwilling to pay for the coverage.

“A very concerning trend”

Homeowners like California retiree Anjali Tierra have increasingly found themselves in a lose-lose situation when it comes to finding affordable insurance. She bought a home in 2018, but by the next year her premium had more than tripled from less than $100 to about $350 per month.

For the past five years, she’s been one of a growing number of U.S. homeowners without insurance. One recent report determined that about 5% of Americans went without homeowners insurance in 2019 — a percentage that has since ballooned to 12%.

The Insurance Information Institute’s Mark Friedlander put the situation into perspective, explaining: “It is a very concerning trend as catastrophe losses continue to escalate. It is not feasible for most Americans to pay out of pocket for a significant loss to their property.”

Understanding the risks

While it’s clearly tempting to eliminate costly insurance in the current economy, there are some important reasons to maintain coverage.

For starters, most homeowners have a mortgage that requires homeowners insurance. But even those who could feasibly live without it, Tierra’s case highlights how hard it can be to secure a new policy at a later date.

And with a growing number of natural disasters destroying homes, it doesn’t appear that insurance will get any more affordable or accessible anytime soon.

If you want to find the lowest rate possible, experts recommend bundling insurance policies, agreeing to a higher deductible, and consulting with an experienced broker.

Chris Agee June 25th, 2024

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