1 In 13 Homeowners Are Risking It All — Here's Why Experts Call It A 'Huge Mistake'

A growing number of American homeowners are gambling with their largest investment by dropping their home insurance coverage, a trend that industry experts warn could have serious financial consequences.

Data from the Consumer Federation of America cited by CNBC Make It reveals that one in 13 homeowners now lacks insurance coverage, up from 5% to 7.4% since 2019. The shift comes as average annual premiums for a $300,000 home jumped 23% last year to $2,230.

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Not having homeowners insurance is "definitely a huge mistake,” Alaina Hixson, director of sales and operations at The Churchill Agency, said to CNBC. “While home insurance is often not cheap, the investment can save thousands and even hundreds of thousands in some cases.”

The risks of going uninsured are becoming increasingly apparent in states like Florida, where recent data from the state’s Office of Insurance Regulation shows tens of thousands of homeowners faced claim denials after Hurricanes Helene and Milton.

Out of 57,415 residential claims from Hurricane Helene, 19,068 were closed without payment. Hurricane Milton saw even higher numbers, with 27,834 denied claims out of 202,989 total residential claims.

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California homeowners face similar challenges as insurers retreat from high-risk areas. According to the San Francisco Chronicle, 13% of realtors had sales fall through this year due to unavailable or unaffordable insurance — double the rate from last year.

The frequency of costly natural disasters has more than quadrupled since the 1980s, according to the National Oceanic and Atmospheric Administration. Despite the increasing risk, many homeowners remain unprotected against specific threats like flooding.

A Trusted Choice survey found that 50% of homeowners don’t realize flood coverage requires a separate policy.

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Cathleen Tobin, a New York-based certified financial planner, framed the decision. “The question isn’t, ‘Can I afford homeowners insurance?’ But rather, ‘Can I afford not to have it?'”

While mortgage lenders require insurance coverage, homeowners who’ve paid off their properties or purchased with cash might choose to forgo coverage, which leaves them fully exposed to repair costs if disaster strikes.

Industry experts recommend maintaining coverage sufficient to rebuild at current construction costs, rather than market value.

For those struggling with premiums, they suggest considering higher deductibles while maintaining adequate savings to cover them if needed.

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