The Insurance Information Institute recently conducted a study which revealed that the percentage of Americans without homeowner’s insurance has more than doubled since 2019. Currently, 12% of American homeowners have opted to go without insurance, compared to only 5% in 2019. Rising premiums across some of America’s most highly populated states appear to be pricing many homeowners out of the market.
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Not carrying a homeowner’s policy is called “going bare” because it leaves homeowners naked against risks like fire, theft, or natural disasters. The latest results from the Insurance Information Institute are not just high compared to five years ago; they are the highest percentage of American homeowners going bare that the Institute has ever recorded.
Mark Friedlander, the Director of Corporate Communications at the Insurance Information Institute, expressed concern about the risk to homeowners in an interview with USA Today, saying, “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.”
It’s worth noting that many homeowners do not want to go bare. According to S&P Global Market Intelligence data firm, home insurance premiums have increased 11% nationally in the last year. That’s an alarming increase, but it doesn’t tell the full story.
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California, Florida, and Texas are some of America’s most populous states. In the past decade, they have all been beset by natural disasters such as hurricanes, fires, and mudslides. These natural disasters have combined to do billions of dollars in damages to property. The cost of covering the claims has become so prohibitive that many of America’s largest insurance companies have stopped writing policies in states at high risk for natural disasters.
The lack of market competition will drive prices up on its own. However, the increased power and frequency of natural disasters (which many scientists attribute to climate change) also contribute to the premium increases. A recent USA Today article reports that Floridians pay the highest premiums in the country. So many carriers have left the market that state-run carrier Citizens Property Insurance is the largest insurer in the state.
A similar situation exists in California, where the state’s public insurance carrier of last resort was getting so many applications that its website intermittently crashed earlier this year. For those who are fortunate enough to get policies, they have a tremendous number of exclusions and high deductibles. This is what is leading so many homeowners to “go bare.” They want insurance, but they simply can’t find it.
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California homeowner Anjali Tierra’s recent experience with home insurance provides a revealing snapshot of the difficulty in obtaining an affordable policy. She told USA Today that she dropped her insurer in 2019 after getting a policy renewal notice increasing her premium from $100/month to $350/month, which she didn’t think she could afford on her fixed income. Since then, she has been unable to find an insurer willing to cover her at any price.
Tierra told USA Today, “Every year, usually in the springtime, I will start to do the research again. I will randomly choose an insurance company to see if they’ll cover me. And since 2019, I’ve been rejected by every insurance company, large and small.” Now, she lives with the risk that a fire could wipe out her most valuable asset and leave her with nothing.
Every fire season, she takes as many precautions as possible to protect her home in the Tehachapi Mountains. She actively keeps brush away from her home and even has trouble installing ember-resistant vents on her roof. Despite that, she sits on pins and needles for every fire season. Tierra knows the risk, but she just can’t stop it.
She told USA Today, “This is my nest egg. I do everything I can do to protect my pets and to protect my emotional welfare, but it has been emotionally draining.” She’s not alone. The scary part about this is that these problems are only beginning. As property values and climate risk rise, so will insurance premiums and the number of homeowners who “go bare.”
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This article Percentage Of Americans Without Homeowners Insurance More Than Doubles In Five Years originally appeared on Benzinga.com
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