5 Best Steps To Take If You Can’t Afford Homeowners Insurance

If you have a mortgage on your home, chances are you’re required to have home insurance on it, as well. But once a home is paid off, there’s no such requirement — and many homeowners are opting out of home insurance amid skyrocketing rates. About 12% of homeowners surveyed last year by the Insurance Information Institute said they had not purchased homeowners’ insurance. Many of those simply don’t have the budget to afford it.

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Insurance costs are so high in some areas of the country that they’ve become a barrier to buying a home at all. Just the insurance premium can be about 10% of monthly housing costs, according to data from Intercontinental Exchange Inc . In high-risk areas, that figure can rise to 25%.

If you can’t afford home insurance right now, here are the five best steps you can take. Also, make sure you’re aware of some common mistakes first-time homebuyers make when choosing insurance .

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Shop Around for Different Carriers

This is the first step you should take — especially if your mortgage is at risk. Experts recommend gathering quotes from as many carriers as possible. You can probably shave a lot of money off your yearly premium by finding the right insurer with the right plan.

If you don’t know where to start, talk with some of your neighbors to find out who they’re insured with.

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Consult an Independent Insurance Agent

As the David Pope Insurance blog noted, independent agents typically work with multiple insurers, so they can be a great resource. Because independent agents have a wide knowledge of the industry, they can quickly evaluate your options and might be able to steer you toward a carrier that will insure you at a more affordable rate.

Contact Your State Insurance Department

State insurance departments are another helpful resource if you can’t afford to insure your home. As with independent agents, state agencies can provide guidance on which insurers in your area might be the best option for your needs.

Enroll In A FAIR Plan

These plans are “meant to be a last resort” if you’ve been denied homeowners insurance coverage, according to David Pope Insurance. You might have been denied because your home is in a high-risk area and the only coverage available is too expensive.

FAIR Plans can get costly and typically offer minimal coverage, but they are an option if you’ve exhausted all the others.

Protect Your Home From Damage

This option might apply if you own your home outright and are not required to have insurance. The best thing you can do in this case is reduce the chances of your home suffering damage during severe weather events.

For example, if you live in a wildfire zone, the National Association of Realtors (NAR) recommends installing “dual-pane windows with tempered glass to better withstand fire-induced breakage.” You can also install nonflammable sidings such as stucco or fiber cement.

In areas at high risk of hurricanes, consider installing impact windows and hurricane shutters to protect against flying debris.

Why Is Homeowners Insurance So Expensive?

The average U.S. insurance rate is $2,377 a year, according to a May 2024 report from NAR. Homeowners could see a 6% rise in average premiums by the end of the year — in addition to the 20% increase over the two previous years.

Premiums are especially high in states with high exposure to extreme weather events and national disasters. Some of the highest premiums are paid by homeowners in states where hurricanes are a major threat, such as Alabama, Florida, Louisiana, Mississippi and Texas. Similarly, rates are high in Kansas, Nebraska, Oklahoma and other states vulnerable to tornadoes.

Meanwhile, the increasing frequency of natural disasters in certain areas could push annual home insurance premiums up by as much as $700 over the next three decades, according to the National Bureau of Economic Research .

This article originally appeared on GOBankingRates.com : 5 Best Steps To Take If You Can’t Afford Homeowners Insurance