As home insurance premiums continue to skyrocket, approximately 7.4% of U.S. homeowners—about 6.1 million households—are without coverage. With premiums now accounting for 20% of homeownership costs, the burden has led to a growing number of households unable to afford insurance.

Amid increasing home damage from climate change, experts warn that exorbitant premiums are becoming a key trigger for rising foreclosure rates.
A report released early last year by the nonprofit Consumer Federation of America (CFA) revealed that about 7.4%, or 6.1 million households, lack home insurance—a record high. The report noted, “Homeowners with annual incomes below $50,000 are twice as likely to be uninsured compared to the average homeowner,” highlighting that 22% of Native American, 14% of Hispanic, and 11% of Black homeowners lack coverage.

The low insurance uptake is also evident in Federal Reserve (Fed) data. Last month, the Fed’s “2024 Economic Well-Being of U.S. Households” report, based on a survey of over 12,000 respondents, found that 7% of homeowners nationwide are uninsured.
Among homeowners with incomes below $25,000 or whose home is their only asset, about 3 in 10 lack insurance. When asked why, 43% of respondents cited inability to afford premiums, while 19% said the cost wasn’t worth it—pointing to affordability as a key driver of the uninsured trend. The CFA expressed concern, “Declining home insurance coverage means homeowners face greater risk of losing their homes to intensifying climate disasters and storms.”

A major issue is the vicious cycle where lack of insurance leads to foreclosures. According to an analysis by data firm First Street last month, there’s a direct correlation between lack of insurance and foreclosures.
Climate-driven storms push homeowners into default, reducing tax revenue for local services like transportation and dampening demand that fuels regional economies. Homes may be neglected or left unmaintained, and the value of undamaged properties may rise slowly or even decline.

Home insurance premiums are soaring daily. CFA’s latest data shows that, in the past year, a typical homeowner with a median credit score and a home with a $350,000 rebuilding value paid an average of $3,303 annually ($275 monthly) for insurance.
First Street notes that premiums began spiking around 2013. By 2022, they accounted for over 20% of the average mortgage payment—nearly triple the 7-8% rate seen in the decade prior. The firm explained, “Since 2019, skyrocketing premiums have started driving up foreclosures.”

Experts suggest increasing transparency in the insurance industry, such as disclosing how premiums are set, as one way to curb the surge.
The CFA warned, “Sharply rising premiums are becoming unsustainable,” adding, “Requiring insurers to publicly disclose data on home insurance underwriting, pricing, coverage, and claims each year would boost industry transparency and help.” The CFA also urged, “Federal and state funds should be invested in home resilience, and insurers should be required to offer lower premiums to homeowners who upgrade their properties to reduce climate risks.”

By Hong-Yong Park