Homeowners Face Tough Choices as Premiums Rise
Across the United States, homeowners are grappling with a significant issue: escalating home insurance premiums. Faced with these rising costs and, in some cases, policy non-renewals, a growing number of individuals are making a potentially risky decision – dropping their home insurance altogether.
For many, their home represents their largest investment. Forgoing insurance, which protects that investment against unforeseen disasters, isn’t a decision they take lightly. Yet, the financial strain is becoming unbearable for some.
A Calculated Risk in Florida
Larry Bendik, a Florida homeowner, is one such example. Several years ago, he canceled his policy after his premium increased substantially.
“All of a sudden, things have gotten out of control,” Bendik told Spotlight on America, reflecting on the sharp increase in premiums affecting homeowners in Florida and nationwide.
Bendik, along with his wife Mona, is retired and has lived in their Tampa-area home for nearly three decades. Having paid off their mortgage allowed them the freedom to cancel their coverage, a move not possible for those still paying a mortgage.
Bendik considers his decision a calculated risk. His home is located inland, away from the coast, and he had a high deductible. He noted, “Even if something happened, I would still get stuck with a big bill anyway. It didn’t make sense to pay that premium and get very little in return.”
A ‘Broken’ Market
Michael DeLong, an analyst with the Consumer Federation of America (CFA), describes the home insurance market as “broken.” He pointed to a 2023 survey by the Insurance Information Institute, which revealed that 12% of homeowners lacked home insurance, more than double the figure from 2019. DeLong stated, “It’s a big, big spike. This is a crisis.”
He emphasizes that the pattern of significant premium increases and policy non-renewals is pushing a record number of people to the point of canceling their home insurance.
“It’s kind of understandable that some people would look at this and be like, I need to drop my insurance. I just can’t afford it. But it’s still a very bad idea. You’re putting yourself at extreme risk,” DeLong cautioned. “You are completely on the hook for repairing or rebuilding your home if it gets damaged or destroyed.”
Disproportionate Impact on Vulnerable Groups
A 2024 CFA report highlighted that homeowners earning under $50,000 annually are twice as likely to be uninsured compared to homeowners overall. The report also identified certain demographics that are at higher risk of lacking insurance:
- 22% of Native American homeowners
- 14% of Hispanic homeowners
- 11% of Black homeowners
According to DeLong, “The people who often needed protection the most, because they were least able to recover from disasters, they often were the people who didn’t have it.”
Aftermath of Wildfires
The consequences of lacking home insurance are evident in areas like California, where residents have faced the harsh reality of rebuilding after wildfires. Several major insurance providers withdrew from the region in recent years due to wildfire risks, leaving many homeowners scrambling to find coverage. A recent Lending Tree study found that nearly one in ten homes in Los Angeles were uninsured, forcing many to rely on personal funds and seek federal and state assistance to rebuild.
Taking the Risk
When Bendik canceled his insurance in 2022, his annual premium had reached nearly $6,000, and rates have continued to climb. Bendik shared that he continues to save, and “At the rate of the premium, (with) a couple of year’s savings, if I needed to, I could pay for a new roof.”
Thankfully, the Bendiks’ home has weathered two hurricanes since they dropped their coverage without sustaining any damage. Bendik said he’s prepared to continue taking this risk unless insurance rates decrease.
Strategies to Save on Home Insurance
The Insurance Information Institute offers tips for lowering home insurance premiums. These include:
- Bundling policies: Combining home and auto insurance can lead to savings.
- Risk mitigation: Improvements such as a new roof or clearing brush around the home can qualify for discounts.
- Discounts: Some companies offer discounts for seniors, veterans, and new construction.
