1 in 8 homeowners don’t have the home insurance they need as rates rise

How many homeowners are uninsured in the U.S.?

NBC reports that the number of uninsured and underinsured homeowners nationwide has jumped in the past five years.

The problem is particularly bad in the South, where 15.7% of homeowners either have no insurance or carry an inadequate amount of coverage. Meanwhile, 20.8% of homeowners who don’t have a mortgage say they lack meaningful insurance coverage.

By contrast, just 8.5% of homeowners with a mortgage lack meaningful coverage. Lenders typically require borrowers with home loans to carry adequate levels of homeowners insurance.

“In most cases, those who have a financial interest in your home — such as a mortgage or home equity loan holder — will require that it be insured,” Worters says.

What areas have the most uninsured homes?

The problem of uninsured and underinsured homes is worse in some places than others.

In Florida, where the home insurance market faces a crisis, 18.3% of homeowners do not have the necessary coverage, including 24.6% of homeowners in Miami-Dade County. Further north in Putnam County, it’s 32.9% of homeowners.

In some high-risk parts of Texas, the percentage of homeowners without meaningful insurance hovers around 40%. In Hidalgo County, 41.3% of homeowners lack substantial coverage, and next door in Cameron County, it’s 36.7%.

Other states with high numbers of inadequately insured homeowners include Louisiana, Alabama, North and South Carolina and West Virginia.

In addition:

22% of homeowners are uninsured in counties where the majority of residents are Native American and Native Alaskan.
14% of homeowners are uninsured in counties where the majority of residents are Black.

Why are people dropping homeowners insurance?

The rising cost of homeowners insurance is a major factor driving homeowners to abandon insurance coverage.

Worters says many factors are behind the recent homeowners insurance price increases, including:

General inflation
Replace-cost inflation, due to supply-chain issues and labor shortages that increase home repair and replacement costs
Losses related to natural disasters

However, rising costs date back more than 20 years. Worters, citing data from the Insurance Research Council, says homeowner's insurance premiums rose consistently from 2001 to 2021.

The rate of increase surpassed household income growth, which has made insurance less affordable for many homeowners.

“As expected, disaster-prone states have the least affordable homeowners insurance,” Worters says.

For example, hurricane-prone Florida has the least affordable homeowners insurance in the country, according to the IRC.

Worters says legal system abuse is another factor driving up costs. This includes false claims of damage to homes, which is common in disaster-prone areas.

“Claims of roof damage in particular dramatically increase the costs of insurance,” she says.

The risks of going without homeowners insurance

Unless your lender requires you to carry homeowners insurance, you can probably get away without doing so.

“Legally, you can own a home without homeowners insurance,” Worters says.

However, skipping insurance can be risky. If you don’t have adequate insurance and a hurricane, tornado or other disaster badly damages your home, you could face steep out-of-pocket losses.

A home is the largest asset that many people own, Worters says. Not only does a homeowners policy insure your structure, but it also covers your personal belongings and offers liability protection in the event of an injury or property damage lawsuit.

“Imagine what would happen if someone was injured or died on your property and their family sued you,” she says. “Or a hurricane totally destroyed your home. The risks are enormous.”

Other coverages to consider are flood insurance and earthquake insurance. Worters says that if you have a home mortgage, your lender may require you to carry some or all of these types of insurance.

What to do if you can’t afford home insurance

If your homeowners coverage has become too expensive, there are things you do to lower your costs.

"The first thing we tell people is to raise your deductible," Worters says.

The insurance deductible is the amount of money that you are responsible for paying toward an insured loss. "The higher your deductible, the more money you can save on your premium," she says.

Of course, you should not raise your deductible unless you are sure you can afford to pay the deductible in the event that you file a claim.

"If you live in a disaster-prone area, your insurance policy may have a separate deductible for damage from major disasters," Worters says. "So, be sure you take this into account when considering whether to raise your standard homeowners deductible."

Making your home more resistant to disasters also might drop the cost of your coverage.

"You will have more insurance options to choose from if you take certain preparedness steps — for example, installing storm shutters and shatterproof glass, or reinforcing your roof," she says.

Older homes can be retrofitted to make them better able to withstand earthquakes, she adds. Modernizing heating, plumbing and electrical systems can reduce the risk of fire and water damage.

Other tips for lowering insurance costs include:

Ask about discounts, such as for bundling coverage or installing home security devices. You also might earn a loyalty price break for remaining with the same insurer for a long period.
Look into group insurance programs, such as through your employer. These often come at lower costs.

Getting homeowners insurance in high-risk areas

States such as California and Florida have seen insurance companies withdraw from offering homeowners coverage, making it more difficult for some homeowners to secure coverage.

In particular, it might be more difficult to find good coverage in areas where natural disasters such as wildfires and hurricanes are a regular occurrence.

If you are buying a new home, Worters suggests asking the real estate agent, mortgage lender or builder for names of companies that write policies in your area.

"If it’s an existing home, ask the previous owners who insured the house," she says.

Your state insurance department also might help you locate insurers in your area.

If you still can’t find coverage, consider the following:

Make upgrades to the house — including trying to make it more "disaster-proof" — that will make the property more attractive to insurers.
Inquire about FAIR plan coverage, which are insurance pools found in many states that sell property insurance to people who can’t get coverage in the voluntary market. Some states offer an alternative to FAIR plans known as beach and windstorm plans.
Explore the excess and surplus market, which can help you find coverage for high-risk homes and businesses.