What to do if you can't afford your homeowners insurance

Your options when you can’t afford your home insurance

If you can’t afford your home insurance, act fast to avoid a cancellation and coverage lapse. Reduce your rates immediately by raising your deductible, ask about discounts you qualify for, and shop around for more affordable coverage.

Option	How it helps	Typical savings/impact	How to do it
Raise your deductible	Lower your premium, but you'll pay more out of pocket after a claim	Lower rates by 20%-40%	Call your insurance company or change it on the web or in the mobile app
Shop around	Compare insurers that may charge less for the same coverage	Lower rates and better discounts	Work with an independent agent who knows the carriers in your area
Bundle policies	Get a discount for combining home and auto or other policies	Discount average of 14%	Quote both your home and auto insurance policies with multiple carriers
Ask about discounts	Make sure you’re receiving every discount you’re eligible for	Combined discounts can save up to 40%	Contact your insurer, ask for a list of discounts, and provide any needed documentation
Home-hardening upgrades	Reduce risk and potentially qualify for insurance discounts	Discounts that can save up to 11% based on the upgrade and insurer	Ask about state-sponsored grants for home hardening
Adjust coverage limits	Remove coverage you don’t need and avoid cutting essential protection	Lower premiums but less coverage	Discuss each section of your policy with your insurer; remove only extras, leaving the dwelling coverage intact
Switch payment plan	Spread payments out if offered by your insurer	Lower payments, even if the annual amount stays the same	Ask your insurer which payment plans are available
Break up payments through your mortgage	Lenders may be able to break up escrow payments instead of a large lump sum	Payments can be spread out over months	Contact your lender
State FAIR plan/assistance	Look for a FAIR plan or last resort coverage if you can’t get a traditional policy at an affordable price	Offers insurance that allows homeowners to keep their mortgage	Contact your state’s insurance department for details

How quickly do you need to act if you can’t afford your home insurance?

Contact your insurer as soon as you know you can't afford the renewal, before the policy lapses, not after. If your policy lapses, your mortgage lender will buy insurance for you at much higher rates and charge you for it.

Force-placed insurance can cost up to 10 times as much as a standard policy, since the insurer sets rates without full information about the property. It protects the lender’s investment in the property, but doesn’t protect you. Lenders must give at least 45 days' notice before force-placing insurance, giving homeowners a window to act.

“Please don't let your homeowners insurance policy lapse. That's especially true if you have a mortgage lender,” said Lisa Gill, an investigative reporter with Consumer Reports. “That forced placement insurance by the bank or mortgage lender is not coverage. It's going to be very expensive, and it's not the same coverage. It really only covers their risks, not yours.”

If you’re already in a situation where your mortgage escrow will fall short, a premium increase usually shows up as a lump-sum escrow shortage or an increased monthly payment. You’ll need to speak with your lender and your insurer to resolve the issue.

What can you do to make your insurance more affordable?

To make your home insurance more affordable quickly, raise your deductible, ask about discounts, adjust your coverage and shop around. Other measures include home-hardening efforts, improving your credit, and looking into payment plans.

Raise your deductible

Increasing your deductible is one of the fastest ways to lower your homeowners insurance premium. The higher your deductible, the lower your premiums will be.

The deductible is the amount you pay before your insurance kicks in. The more you pay, the less the insurance company has to pay out on a claim. Increasing your deductible can lower your rates by 25%-40%, depending on your insurer and coverage.

Choosing the highest deductible to save on your insurance premium is tempting, but if you can’t cover the amount on short notice, it can leave you in a financial bind and defeat the purpose. However, if it’s a choice between a high deductible and no coverage, choose the high deductible.

Shop around and compare quotes

Shopping around is the best way to find the most affordable home insurance rates, even in high-cost states like Florida. Start with an online search, but consider the assistance of a broker or independent agent.

“If you're going to start shopping around, you can do it online. But you want an independent insurance broker, whether you find them online or you find them in person, to show you every single option for your property,” said Gill.

Gill noted that there are many insurance companies beyond the best-known options, and one of them might offer a lower rate for your home. A broker will be aware of those options.

“And there are a lot out there besides just your big names. So there may be options in your

state that you've not heard of before, or that are just regional. And there are tons of

brokers, typically in most little towns, that can sit down and help you.”

Get quotes from three to five different companies to compare options. Home insurance is often tied to your escrow, and it can go unreviewed for years. The easiest way to remember is to shop for coverage at every policy renewal, not just when premiums spike.

Ask about every available discount

Many homeowners qualify for discounts they’ve never asked about, such as bundling and security systems that can save them up to 40% collectively.

For example, most insurers allow policyholders to bundle multiple policies, such as home, auto, RV, and pet insurance, to receive a discount. There are other discounts you can ask for, like occupation-based savings, that many insurers offer but may not apply automatically.

Speak with your insurer or agent to review the list of available discounts and determine which may apply to your policy.

Invest in home-hardening upgrades with state assistance (where available)

If you can’t afford your insurance, you probably can’t afford upgrades, but several states now have grant programs to help homeowners with wildfire mitigation and wind mitigation efforts and get lower insurance rates. Examples include Strengthen Arkansas Homes, NC's Strengthen Your Roof, and SC Safe Home, which can offset some of the upfront costs.

Depending on the insurer and the upgrade, improvements such as FORTIFIED roofs, leak detectors, monitored security systems, and water shutoff devices may qualify for insurance discounts.

Impact-resistant roofing, storm shutters, or upgraded electrical panels can each cut premiums by 5% to 11% in high-risk states.

Adjust your coverage carefully

You can lower your homeowners insurance premium by eliminating supplemental or optional coverages, such as earthquake, scheduled personal property, and identity theft protection. However, cutting the wrong coverages can leave you significantly underinsured.

Keep enough dwelling coverage to rebuild your home, and enough liability coverage to protect you if someone is injured on your property. These coverages protect you against the largest financial risks and are usually the last coverages you should reduce just to save money.

Note that your deductible and coverage are different. You can increase your deductible without reducing coverage. Both can save on premiums, but they come with financial risks.

Improve your credit score

In most states, insurers use credit-based factors to price policies, so improving your credit score can lower premiums over time. While other actions, such as raising your deductible and shopping around, can reduce premiums immediately, improving your credit score is not an immediate fix.

Insurers use a credit-based insurance score to predict how likely you are to file a claim. To determine this score, they look at parts of your credit history, such as payment history, outstanding debt, types of credit, length of credit history, and any recent credit activity. Improving your credit score also improves your credit-based insurance score.

Your insurance score, along with other factors such as property characteristics, claim history, coverage, and location, helps determine your risk and calculate your premium.

Ask your insurer about a different payment plan

Some insurers offer monthly, quarterly, or hardship payment plans that ease a lump-sum burden, even if the annual premium remains the same.

Talking with your insurer should be the first step if you can’t afford your premium, especially if the problem is for a limited time rather than an unaffordable annual premium.

Talk to your mortgage servicer

If a higher insurance premium creates an escrow shortage, ask your mortgage servicer whether you can spread the shortage over future monthly payments rather than paying the entire amount at once. Options vary by lender and loan.

If you can't pay your home insurance premiums, your lender may obtain coverage through a process called force-placed insurance. Rates are typically much higher, and coverage is limited. If a forced-place policy is already in effect, your lender may choose to foreclose if you can’t pay the premium.

Check your state's FAIR Plan or insurer of last resort

If you've tried to find a lower rate, have been rejected by private insurance, and can't afford coverage, contact your state's Fair Access to Insurance Requirements (FAIR) plan or insurer of last resort. FAIR Plans provide a last-resort option for homeowners who can't find or afford coverage in the private market.

Thirty-four states and Washington, D.C., offer some form of FAIR plan, as a last resort. Rates are typically significantly higher than those of private insurers, and coverage is limited. These plans are designed as a stopgap until the policyholder can get traditional coverage, not a permanent solution.

What happens if you go without homeowners insurance?

If you have a mortgage, your lender will generally require you to maintain homeowners insurance and will purchase a force-placed policy if you don’t keep a standard policy. A force-placed policy usually only includes coverage required by the lender and doesn’t include personal property or liability coverage. If the policy limits don’t fully cover a claim, the homeowner may have to pay the difference out of pocket. You will be charged for the coverage as part of your mortgage payment.

If you own your home, you don’t legally have to have insurance, but it is financially risky. You would have to pay out of pocket for any fire, disaster, or liability claim, and one uninsured disaster can wipe out your home's equity.

If you have a mortgage, failing to maintain the required insurance can put you in violation of your loan agreement and, in serious cases, contribute to foreclosure proceedings.

The bottom line: Don't let coverage lapse without a plan

Don't let your home insurance policy lapse without talking to your insurer first. Call your agent to ask about discounts and payment options, and see whether changing your deductible or coverage can lower your premium. If the price is still too high, shop around before you stop paying.

FAQ: When you can’t afford home insurance

What happens if I stop paying my homeowners insurance?

If you stop paying your homeowners insurance, your mortgage lender may purchase a forced-place policy and charge you for it; rates are typically higher, and coverage is limited. If you own your home and forgo homeowners insurance, you’re financially liable for any damages or injuries that occur on your property.

Can I get a mortgage without homeowners insurance?

No, traditional lenders require homeowners insurance to protect their investment. Failing to maintain homeowners insurance leads to a force-placed policy or possible foreclosure if you fail to pay for that policy.

Is force-placed insurance more expensive than regular homeowners insurance?

Yes, rates can be as much as 10 times a standard homeowners insurance policy. Also, coverage your lender puts in place typically does not include personal property or liability coverage.

What's the fastest way to lower my homeowners insurance premium?

The fastest way to lower homeowners insurance premiums is to contact your insurer and make policy changes, such as adding eligible discounts or raising your deductible. Switching to a cheaper insurance company will also quickly reduce your costs.

Does every state have a FAIR plan for homeowners who can't get insurance?

No, only 33 states offer FAIR plans to help homeowners who can’t get insurance. In states without state-backed insurers, homeowners can only obtain coverage through traditional insurers or carriers willing to write high-risk policies.