Many in US don’t carry home insurance

$1.6 trillion in property value is unprotected

More than 6 million homeowners nationwide do not carry homeowners insurance, putting them at extreme risk in the event of natural disasters or other significant damage to their homes, a new study has found.

The study by the Consumer Federation of America found that uninsured property accounts for 7.4% of all properties in the country and leaves $1.6 trillion in property value unprotected.

“Being uninsured poses a potential threat not only to individual homeowners but also to communities and our national housing stock,” the Consumer Federation of America said in “EXPOSED: A Report on 1.6 Trillion Dollars of Uninsured American Homes.”

“Many consumers are struggling to afford rising premiums and must go without homeowners insurance,” said

Sharon Cornelissen, the Consumer Federation of America’s director of housing and co-author of the report. “That puts them at risk of losing everything. One storm or wildfire means they have to go into deep financial debt to repair their home, live with unsafe and inadequate housing, or even become homeless.”

The report notes that lack of homeowners insurance disproportionately impacts Hispanic, Black, and Native American homeowners. “Over time, insurance access is likely to become a key decider of who can fully reap the benefits of homeownership, including maintaining their home and building wealth,” the report said.

Findings in the study, which was an analysis of 2021 American Housing Survey data from the US Census Bureau, included:

One in 13 American homeowners, living in about 6.1 million homes, are uninsured.

Homeowners earning under $50,000 per year are twice as likely to lack insurance than homeowners in general. Among lower-income homeowners,

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15% are without coverage.

Certain demographics are disproportionately at risk: 22% of Native American homeowners, 14% of Hispanic homeowners, and 11% of Black homeowners have no insurance.

Thirty-five percent of owners of manufactured homes and 29% of homeowners who inherited their homes lack coverage.

Rural homeowners, those living in metropolitan areas of Houston and Miami, and homeowners in Mississippi, New Mexico, and Louisiana are most likely to be uninsured.

In 2021, homes with an estimated $1.6 trillion in property value lacked coverage, including $339 billion of uninsured Hispanic-owned homes and $206 billion of uninsured Black-owned homes.

The Consumer Federation of America has several recommendations, including:

State insurance regulators should collect more data to track homeowners insurance gaps and inequalities in insurance markets.

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States and the federal government need to substantially increase investments in community risk reduction, home fortification and loss mitigation, and develop strategies to reduce insurers’ overreliance on unregulated, global reinsurance. That is the coverage that insurance companies purchase to offload some of the risk they assume for their policyholders.

Insurance companies have not been held accountable for incidences of insurance “redlining,” similar to the denial of mortgages in Black and Hispanic communities. More research should be done, and regulators should use existing Fair Housing laws to investigate these gaps, and if needed, to correct them.

“The economic fabric of entire communities is also at risk if significant portions of residents cannot rebuild after a disaster,” said Douglas Heller, the organization’s director of insurance. “Our study should be a wake-up call for lawmakers, insurance and housing regulators, and the nation’s emergency management agencies.”

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