6.1M American Homeowners Are Without Home Insurance, Report Finds | Insurify

Who’s uninsured

Rising home insurance rates affect everyone, but the CFA’s study of the U.S. Census Bureau’s 2021 American Housing Survey found certain demographic groups were more likely to lack homeowners coverage.

Homeowners of color, those earning less than $50,000 annually, homeowners in rural areas, those living in manufactured homes, and those who inherited their houses are more likely to be uninsured, according to the report.

Uninsured rates are also higher in areas with severe risk of climate disasters, including Miami, Houston, Mississippi, New Mexico, and Louisiana.

Home age, home value, home type, and whether a home is financed also affect how likely a home is to be uninsured, the report noted. Among homeowners with mortgages, just 2% lacked insurance, which lenders typically require as a condition of getting a mortgage. By contrast, those who owned their homes free and clear were seven times as likely to be uninsured.

Why homeowners go uninsured

Nationally, home insurance costs have skyrocketed in recent years as more frequent and severe weather events and natural disasters, like wildfires, make it difficult for insurers to remain profitable in high-risk areas. The average annual cost of home insurance increased by nearly 20% in the past two years and is likely to rise another 6% in 2024, Insurify reports.

Florida and Mississippi are among the most unaffordable home insurance states, Insurify’s data shows. Oklahoma, Texas, and Kansas round out the top five least affordable states for home insurance.

“Climate change is generating more frequent and severe weather events that result in billions of dollars in claims,” said data journalist Cassie Sheets, the author of Insurify’s report. “At the same time, the cost of reinsurance, which helps insurers cover their losses, is rising. It’s all adding up to increasingly unaffordable home insurance, and it’s no surprise that some of the most vulnerable populations are the most at risk of being uninsured.”

What’s next: CFA recommendations

The CFA’s report calls on regulators to require insurers to provide more detailed information about home insurance costs, including sales, pricing, and available coverages.

The report also notes that regulators and the industry need to “reduce insurers’ over-reliance on unregulated reinsurance, such as through the creation of a public reinsurance mechanism that would reduce costs for insurers and homeowners.”