The number of American homeowners rolling the dice and going without insurance is growing.
More than 6 million U.S. homeowners are uninsured, according to a report by the Consumer Federation of America.
The research indicates that uninsured properties represent 7.4% of all properties nationwide -- or 1 in 13 -- leaving an estimated $1.6 trillion in property value "dangerously unprotected from natural disasters and other significant damage."
"Many consumers are struggling to afford rising premiums and must go without homeowners insurance," Sharon Cornelissen, CFA's Director of Housing and co-author of the report, said in a statement. "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."
According to the report, homeowners making under $50,000 a year are twice as likely as the general population to be uninsured. Homeowners of color are also disproportionally at risk, with an estimated 22% of Native American, 14% of Hispanic, and 11 % of Black homeowners having no homeowners insurance.
Over one third (35%) of owners of manufactured homes, as well as 29% of those who have inherited their homes, have no homeowners insurance, per the report.
"Moreover, our analysis demonstrates that while the issue of uninsured homeowners is a national one, homeowners in rural areas, the climate-vulnerable metropolitan areas of Miami and Houston, and states including Mississippi, New Mexico, and Louisiana are among the most likely to go uninsured," the report noted.
Being uninsured poses a potential threat not only to individual homeowners but also to communities and our national housing stock, said Douglas Heller, CFA's director of insurance.
"Insurance is an essential part of homeownership, financial security, and community resilience. When millions of American families simply cannot find or cannot afford insurance coverage for their home, we are all exposed,” he said. "Not only are uninsured families unprotected, but the economic fabric of entire communities is also at risk if significant portions of residents cannot rebuild after a disaster."
Many homeowners are struggling to afford steeply increased premiums, while others find it difficult to obtain insurance in the private market altogether.
"In recent years escalating climate disasters and spiking prices in the global reinsurance market have placed serious financial strain on the homeowners insurance system and on homeowners across the U.S.," CFA said. "Concerns are growing that many American homeowners are forced by financial realities to forego homeowners insurance, sometimes called 'going bare.' But going bare puts consumers at risk of accruing significant financial debt to repair their homes, having to live with unsafe and inadequate housing conditions, or moving from homeowner to homeless after disaster strikes."
The typical homeowners insurance policy covers damage from a fire, windstorms, hail, riots and explosions — as well as other types of loss such as theft and the cost of living elsewhere while the structure is being repaired or rebuilt after damage, according to the Insurance Information Institute. Flood and earthquake damage are excluded under homeowners policies and require separate policies.