The national problem of uninsured homes is likely to worsen amid a growing homeowners insurance crisis, according to a new report.
A recent report from the Consumer Federation of America (CFA), based on data from the American Housing and Community Survey, found that 7.4% of homeowners, or one in 13, do not have homeowners insurance, representing nearly 6.1 million households.
The value of these uninsured and unprotected homes was last estimated at $1.6 trillion in 2021.
The CFA warned that without significant investment in climate change adaptation and stronger oversight of the insurance industry, the uninsured housing problem is likely to worsen in the coming years.
“Uninsurance can deepen economic instability for millions of homeowners across the country, especially low-income households,” CFA said in the report. Racial disparities in uninsurance rates are also likely to exacerbate racial wealth disparities. Access to insurance will be key to determining who can realize the benefits of homeownership, including home maintenance and wealth building.”
The report found that low-income homeowners with annual incomes of less than $50,000 were uninsured at 15%, double the rate of homeowners with incomes of $50,000 or more. Additionally, 35% of manufactured homeowners and 29% of inherited homeowners were uninsured.
By race, Native Americans had the highest uninsured rate at 22%, followed by Hispanics at 14%, Blacks at 11%, Whites at 6%, and Asians at 5%. Owners without a mortgage were seven times more likely to be uninsured than owners with a mortgage.
Hispanics (17%), blacks (12%), and Asians (8%) were more likely to be uninsured if the homeowner was 64 or older than younger, while whites had the same rate at 6% regardless of age.
By home value, homeowners with homes valued at $150,000 or less had an uninsured rate of about 19%, compared to 4% of homeowners with homes valued at $450,000 or more. Also, homes built before 2000 were about 70% more likely to be uninsured than homes built after.
At the state level, Mississippi and New Mexico had the highest homeowner uninsurance rates at 13% each, followed by Louisiana (12%), West Virginia-Alaska-North Dakota-Alabama-Oklahoma (11%), and Florida-Texas (10%). California was at 5 percent.
To address the uninsured housing problem, CFA suggested that state insurance regulators collect data to track homeowners’ insurance gaps and inequities in insurance markets, require broader investments to mitigate uninsured rates, and measure more information on racial disparities.
“Not only are uninsured households left unprotected, but when a significant portion of residents are unable to rebuild after a disaster, the entire community’s economy is at risk,” said Douglas Heller, Director of Insurance at CFA. “This report should ring an alarm for lawmakers, insurance and housing regulators, and national emergency management organizations.”
BY NAKI PARK, HOONSIK WOO [park.naki@koreadaily.com]
