Homeowners have difficulty as insurance companies stop offering coverage due to economic and environmental issues.

In the past, having home insurance was simply considered a necessary precaution. However, with the current state of the economy and pressing issues such as climate change, more and more homeowners are finding themselves dropped by their insurance providers and unable to afford coverage elsewhere.

For Jamie Lafollette, this reality hit home when she stumbled upon an article stating that her insurer, State Farm, was pulling out of Santa Cruz County. Panicked, she immediately contacted her agent and was informed that her policy would be cancelled, prompting her to begin the daunting task of finding a new policy. As reported by The Washington Post, Lafollette described the process as both difficult and ongoing.

The first quote she received was a staggering $10,000 per year for minimal coverage. Desperate, she reached out to multiple brokers and even considered lesser-known companies in hopes of finding a more affordable option. However, as she lives in Soquel, California near a forest, the constant threat of wildfires makes homeowners insurance a crucial necessity. Sadly, the quotes she received ranged from $17,000 to $25,000 annually, far beyond her budget.

Lafollette shared her distress, stating that she may not be able to keep her home due to these exorbitant insurance costs. Unfortunately, she is not alone in this struggle. According to State Farm, the cancellation of policies in her state affects only 2 percent of homeowners, leaving Lafollette with limited options. This is a growing issue, as a 2023 estimate by the Insurance Information Institute revealed that 12 percent of homeowners did not have insurance in 2022, a significant increase from 5 percent in 2019.

Furthermore, a recent report by the Consumer Federation of America found that 7.4 percent of homeowners were uninsured in 2024, based on data from the American Housing Survey. According to Sharon Cornelissen, the director of housing at CFA, this percentage is expected to rise when the 2023 data is released.

To make matters worse, some insurance companies have started pulling out of areas prone to natural disasters, citing climate change and high payouts as reasons for leaving their policyholders without coverage. This leaves homeowners like Lafollette with no choice but to forgo insurance.

Mark Friedlander, the director of corporate communications for the Insurance Information Institute, stresses the importance of homeowners not taking this risk. With lenders requiring insurance for mortgage loan applicants, choosing to go without coverage could potentially lead to foreclosure in the worst case scenario.

It is clear that homeowners like Lafollette are not willingly going uninsured. The combination of cancelled policies and limited, expensive alternatives leaves them with no other option. As Friedlander points out, it is simply unrealistic for homeowners to be able to cover catastrophic losses out of pocket. The rising number of uninsured homeowners is a cause for concern and further action must be taken to address this issue.

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