Rising Homeowners Insurance Costs Drive Coverage Gaps and Community Risks

The rising cost of homeowners insurance in the U.S. is leading an increasing number of homeowners to forgo coverage, according to multiple recent reports. The Federal Reserve's 2024 Economic Well-Being of U.S. Households survey found that 7% of homeowners across the country are uninsured, with affordability being the primary barrier. Lower-income homeowners, particularly those earning less than $25,000 annually or whose main asset is their home, are disproportionately affected, with uninsured rates reaching approximately 30% within these segments.

This trend is corroborated by a 2024 report from the Consumer Federation of America (CFA), which highlighted that about 7.4% of American homeowners lack insurance, equating to 6.1 million homes. The uninsured rates are notably higher among minority groups, including Native American, Hispanic, and Black homeowners. The CFA underscored the increased exposure of these uninsured homeowners to property losses, especially given the frequency of severe weather events.

Further research from First Street’s 2025 analysis illustrates that the lack of homeowners insurance correlates strongly with elevated foreclosure rates. The impact extends beyond individual properties, as foreclosures reduce municipal tax revenue and suppress local economic activity. Declining property maintenance and slower growth or depreciation of home values follow such foreclosures, affecting entire communities.

The escalating insurance premiums partly explain why many homeowners opt out of coverage. The CFA’s 2024 data shows that the average annual premium for a typical homeowner has risen to $3,303, constituting over 20% of the average mortgage payment—a substantial increase from previous years. This premium inflation began around 2013 and has coincided with an upward trend in home foreclosures since 2019, exacerbating housing market vulnerabilities.

To address these challenges, the CFA advocates for increased transparency in the homeowners insurance market. This includes public disclosure of underwriting, pricing, coverage, and claims data by insurers to enhance market oversight and consumer understanding. Additionally, the group recommends state and federal investments in housing resilience initiatives and incentivizing premium reductions for homeowners who adopt climate risk mitigation measures.

These findings highlight a critical intersection of housing affordability, insurance market dynamics, and community economic stability. The rising insurance costs strain homeowners financially and have broader implications for municipal finance and neighborhood vitality. Industry stakeholders and regulators are thus confronted with balancing risk-based pricing with accessibility and sustainability in the homeowners insurance domain.