Is Home Insurance Pricing Retirees Out of the American Dream?
Homeowners insurance is a national crisis — and retirees are hit especially hard.
America celebrates 250 years as a nation this month, and over that span the "American Dream" has become completely intertwined with our homes.
Our life aspirations typically involve: A partner, a couple of kids, a college degree, a steady job — and a home to call our own. But when it comes to protecting that home with insurance, that dream has become akin to a horrifying nightmare.
Ask Charlene Craig. The retired 65-year-old graphic artist from La Mesa, Calif., and her husband James have long tracked their expenses "religiously," even creating a custom database to do so.
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So Craig knows exactly how much her home insurance costs have risen over the last few years — and it tells the shocking story of the broader American market.
In 2019, it cost $735 a year to insure their 1,600-square-foot home near San Diego that originally belonged to her grandparents. Then it nudged north to $769. Then $951. Then $1,406. Then $1,906.
When it was slated to jump another $600 — she began to panic. She and her husband were both retired, and her husband had developed serious health issues.
Rising premiums across the country
"We went, 'Holy cow, we can't afford that?'" she remembers. "We did everything we were supposed to do for retirement, we saved, we were scrupulous — then this. It's so scary, and I feel very unsettled."
Craig is not alone. Consider these eye-popping statistics: In Overburdened, a report released last year from the Consumer Federation of America, researchers found that homeowners insurance premiums had jumped in 95% of zip codes from 2021 through 2024.
The average increase was $648, up 24%. In a third of zip codes, premiums rose by more than 30%.
"We are seeing a homeowner's insurance crisis across America," says Michael DeLong, a research and advocacy associate at the federation. "People are struggling to pay their premiums, or are seeing companies cut back on coverage or withdraw from certain areas. It's becoming expensive and unaffordable, and it's affecting retirees."
To get a glimpse of the Ghost of Home Insurance Future, look at Florida — home to the most retirees and the highest insurance rates. Insurance on a $350,000 house, owned by someone with midlevel credit, would cost a whopping $9,462 a year — or $789 a month, according to the CFA.
And that's if you can find coverage. Insurance companies are pulling back or pulling out of certain higher-risk areas altogether, if the numbers don't make sense for them.
"The bottom line is we're seeing unprecedented weakening of competition between insurers, and an unprecedented increase in the costs of home insurance," says Amy Bach, executive director of the advocacy group United Policyholders.
"This has far-ranging ramifications — not just for individuals, but for property values, real estate transactions, mortgages. Homeowners are struggling to stay insured all over the country."
Use the tool below, powered by Bankrate, to explore and compare some of today's top home insurance offers:
A 'triple whammy'
The rise in insurance rates is the product of several factors at once. A "triple whammy," as Bach calls it.
First there's our changing climate, with more severe and more frequent storms threatening growing pockets of the country. One Treasury Department study tracked a four-year period that resulted in 84 different disasters (not counting floods) costing $1 billion or more, and causing $609 billion in total damages.
Next there's inflation, with the costs of almost everything going up — CPI was 3.8% annually in April, the highest level in three years. That affects homebuilding materials, which — along with labor shortages exacerbated by the immigration crackdown and tariffs slapped on products from abroad — means that the costs of repairing and rebuilding are higher than ever.
Then there's technology — elements like Artificial Intelligence and drone footage, which have given insurers, which Bach calls "TMI" or too much information. "In the old days, insurers would base their decisions on history, like if there were any previous claims on the property," she says. "Now, they're basing their decisions on what these tech models are telling them might happen in the future."
When insurers start limiting their coverage in certain areas, or stop writing new policies, or pull out altogether, that leaves homeowners with a couple of options — neither of them particularly attractive.
One is to secure policies through whichever companies are left servicing the area, which are often newer and smaller and without reliable long-term track records.
The other is to go bare — foregoing home insurance altogether. Twelve percent of homeowners are doing just that, according to a study by the Insurance Information Institute and Munich Re. That's up from 5% a decade ago—and in hard-pressed areas like Florida, the number may be as high as 20%.
Hitting retirees in their homes
In other words, it's a damned-if-you-do, damned-if-you-don't situation. While younger homeowners in their prime earning years might not be financially crushed by rising premiums, it's another story for retirees.
When someone is dependent on Social Security or pension checks, while simultaneously facing rising costs on everyday things like gas and groceries, every dollar counts — and there is often no room in the monthly budget for premiums that jack up every year.
John Becker, a 74-year-old who lives in California's high desert near Victorville, vividly remembers five years ago when his insurer called and said it wasn't writing any more policies in the area.
That sent him scrambling to call every insurer he could think of — all of whom told him the same thing. Now he has not one policy, but two: A fire-specific one through the state's community pool of last resort, known as the FAIR Plan, which costs him $4,000 a year. Then a second policy to cover everything else, which costs another $1,550.
"We're stuck with this system, and we haven't been able to find a way around it," says Becker — ironically, a former fire chief himself. "I know a lot of friends who have gone somewhere else. I don't know what's going to happen."
Strategies to get and stay covered
Nonetheless, homeowners aren't totally powerless.. There are a few strategies you can implement to minimize insurance burdens, fight back against unfair treatment, and protect what may be your family's biggest financial asset.
But it takes due diligence, hard work, flexibility about the specific coverage you need and openness about the company you're getting it from.
What you don't want: to leave yourself exposed, so that everything you worked for — and want to pass along to your heirs, perhaps — is at the mercy of a random storm that could come at any moment.
Here are a few tips from the experts about how to deal with rising insurance costs and protect your home without breaking the bank.
Shop around
A consumer's best weapon is always knowledge, and researching all the information available to you. Instead of blindly accepting whatever quote a company gives you, study the range of options in your local marketplace.
A good starting point: The financial information site Bankrate ranked a number of standouts in the home insurance space, including USAA, Amica, Chubb and NJM. Another useful resource to use as a cross-reference: JD Power's customer satisfaction rankings, where Amica, The Hartford and Chubb came out on top.
It can also be helpful to have a seasoned ally in your corner. "We are very much in favor of working with a really good agent," says Bach. "They can scour the market for your best options, and stay on top of how your local market is evolving.
Some of these new startups can be hazardous to consumers, and there is a lot of noise on the Internet, so good coverage has become harder to find on your own."
You can explore a national database of independent insurance agents here. The National Association of Insurance Commissioners maintains a database on licensing and complaints at this site. Just go to the consumer insurance search.
Bolster your home's defenses
You can't entirely disaster-proof your home, but you can take steps in that direction. Not only will that give you some peace of mind, but there can be a two-stage financial benefit.
"Some states have established mitigation programs of thousands of dollars in grants to strengthen your home against wildfires or hurricanes," says DeLong of the consumer federation. "That can save you a lot of money. Then make sure insurance companies know about the actions you've taken, which will hopefully lower your premiums as well."
Some examples, from Bach: Hail-resistant shingles, in areas with frequent hail events (like Colorado); and roof tie-downs, to prevent structures being blown away in hurricane-prone areas (like Louisiana or Florida).
For home improvement guidance, FEMA has brochures (go to FEMA and search "protect your property") on common issues like storm surges, earthquakes, severe winds, flooding and wildfires. And for funding those upgrades, search for "hazard mitigation assistance grants" on the FEMA site.
One thing to keep in mind: It's often older homes that are under the microscope for insurers. That's where steps like upgrading old pipes or installing moisture sensors that can give you advance notice of problems, can really pay off.
If you're downsizing and selling the old family home, moving into one with newer construction — or renting — will bring fewer insurance headaches.
Don't go 'bare'
Going without home insurance altogether is only possible if you've paid off your home, since if you have a mortgage, the lender will typically require it. But with premiums at record highs, it can seem very attractive to see those monthly costs fall to zero.
However, you're putting everything you have in jeopardy—especially since for many American households, the home is their biggest asset. "Going without coverage is incredibly risky, and we don't recommend it," says DeLong.
"The costs of repairing or rebuilding a home could be hundreds of thousands of dollars, and most people just don't have that kind of money lying around. Self-insuring is only a good option if you're very wealthy."
Another important thing to remember: Home insurance doesn't just deal with the structure, it can protect you if someone gets injured on your property. So ditching it altogether "opens you up to tremendous loss due to liability," says Janet Ruiz, spokesperson for the Insurance Information Institute.
A side note: Don't let your policy lapse out of carelessness, either. In that case your lender might slap what's called a "force-placed" policy on the property, which protects them but not you. "That's a bad bet for you, and expensive — especially if you're on a fixed income," says Bach of United Policyholders.
Advocate
Politicians aren't blind, and they can see how deeply the homeowner's insurance crisis is affecting voters. That's why we are starting to see policy action to wrestle down costs — and why individuals should continue to advocate for change, before they become swamped by premiums they can't afford.
"The good news is that more states are adopting reforms and taking measures to lower costs," says DeLong. "But I think insurance companies should be required to pass along more discounts as a result, because this needs to result in lower premiums."
One example: Florida, which has initiated tort reform, established state-backed reinsurance programs, encouraged more private insurers to get into the market and launched the "My Safe Florida Home" program that includes grants for mitigation measures.
"Legislation is helping to lower premiums and bring in more insurance carriers to make it a healthier insurance market," notes Ruiz.
Beyond advocating for state or federal policy change, homeowners should advocate for themselves. If they feel they have been treated poorly — their policies cancelled unfairly, their claims delayed or denied, or their premiums gone through the roof for faulty reasons — they have recourse.
"Insurance companies are supposed to promptly pay if your claims are legitimate," says DeLong. "So if they are making you fill out excessive paperwork, or not responding, or making you jump through hoops, or giving insultingly low offers much lower than the damage that occurred, then stand up for yourself. Know your rights, and don't be afraid to speak up."
Such complaints are typically handled through your state insurance regulator. Find your local contact at the National Association of Insurance Commissioners.
Tweak your coverage
A smart consumer will review their policy every year, instead of just automatically signing on the dotted line. If costs are getting out of hand, raising your deductible is the traditional way to reduce premiums.
Homeowners might not like to hear that, since it means you're going to face some out-of-pocket costs before coverage kicks in. But if you want to prevent a catastrophic scenario such as being wiped out completely — and if raising your deductible can help you do that, then you should consider it.
"It's generally the best strategy for bringing premiums down," says Bach. "Raise your deductible, but not too high. Just remember that will leave you with a gap — so know what that gap will be, and have a rainy-day fund to cover it." If you're raising a typical $1,000 deductible to $2,000, for instance, then try to save a little every month so you'll have that amount handy when necessary.
Other ways to tweak your policy: Eliminate non-essential coverage — for instance if you're covered for a garage, but you don't even have one. And do your research about discounts that might be available that you're not aware of.
Those might include people over 55 (the logic being they spend more time at home, and are more on top of any problems), those who work remotely, or those who have access to coverage through their employer or professional association.
"Seniors can save money by making sure they get all the discounts they are eligible for, and bundling home and auto with the same carrier," suggests Ruiz. Such bundling could even save you in the range of 20-25%.
That's exactly what saved California's Charlene Craig. When she and her husband were staring a potential $2,508 annual bill in the face, she explored very avenue possible.
She ended up landing with AAA — where the couple already had other policies, including auto — and were able to get their premium down to $1,126. She's still worried about potential long-term care costs for her husband, which could turn out to be steep. But at least now she can breathe a little easier, knowing that their runaway home insurance costs have been brought back under control.
"It made such a huge difference," she says. "Desperation makes you get real creative."
Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.
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