Yahoo Finance Thinking about 'going bare'? Here's what you need to know before canceling your property insurance over soaring costs
While Florida statute 800.3 lists public nudity as a misdemeanor in the first degree, paying high homeowner’s insurance in the Sunshine State is murder on one’s budget these days — which explains why some homeowners have defiantly decided to “go bare.”
Yes, home insurance premiums are up everywhere — but in Florida, they’ve done a fine impression of a Saturn V rocket at Cape Canaveral. In its 2023 Home Insurance Pricing Report, Policygenius found that from May 2021 to May 2023, prices soared by a tops-in-the-nation rate of 68%.
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Car insurance premiums in America are through the roof — and only getting worse. But 5 minutes could have you paying as little as $29/month
Thus arises the “going bare” phenomenon, which simply means taking a pass on insurance and hoping things work out so that cost savings will offset any losses insurance may normally cover.
You’d think everyone in Florida and elsewhere would view coverage as a must-have. But a recent study from the Insurance Information Institute (III) and Munich RE reveals that 12% of U.S. homeowners surveyed haven’t insured their properties. Those numbers would likely be even higher if most mortgage lenders didn’t require proof of home insurance.
Drill down and you’ll find, as the Miami Herald reports, that 15% to 20% of Florida homeowners are forgoing coverage.
Here’s what’s behind the phenomenon and whether going bare is worth the risk, no matter the cost savings.
A nasty home insurance climate
The economics behind going bare are simple enough to see — and feel in the pit of your stomach. By May 2023, home insurance policy premiums in the U.S. increased by an average of 21% at renewal year over year, according to the 2023 Policygenius Home Insurance Pricing Report. That’s more than five times the rate of inflation for the same period: 4% according to the U.S. Bureau of Labor Statistics (BLS).
All this comes as consumers cry foul over auto insurance rates, which rose 17% during the same period, BLS figures show, and an astounding 41% from May 2022 to May 2024.
Yet while car insurance rates have jumped mostly due to a rise in car accidents and repair costs (so insurers say), the home end of things constitutes a much different story. Here, climate change has played a significant role.
Insurance Journal reports that in 2023, the U.S. endured a record 28 weather and climate disasters that caused at least $1 billion in damage. That means higher costs for insurers and rising premiums for homeowners.
Yet the III’s report arguably points to an attitude of invincibility among Americans with mortgages. Roughly four in 10 (41%) believe climate or weather risks and events will not impact their homes for at least the next 10 years.
Read more: Berkshire icon Charlie Munger believed homeownership is for families who want to live in them — not single people. Here’s how to invest in real estate no matter your marital status
What happens (and could happen) if you go bare
Without homeowners insurance, you become what the industry calls “self-insured”— which means simply that it’s 100% your financial responsibility to fix the roof if it caves in, even if the budgetary roof also caves in.
Things must be terrible when you forgo insurance in Florida, a state infamous for its six-month Atlantic hurricane season. On the one hand, having a paid-off mortgage puts you in a position to leverage equity against whatever damage you may suffer in a storm, and hope FEMA assistance covers some or all of the damage.
The question, especially if you live there or in California, is whether climate change will lead to even greater impacts. The Florida Climate Center at Florida State University notes that a larger proportion of storms reached major strength in recent years — and predicts that flooding from hurricanes will increase and become more hazardous.
But even if you live in an area where climate-related events are unlikely, or natural disasters uncommon, other factors make skipping homeowners insurance a dubious idea at best. Insurance covers property liability, so if someone gets injured on your property (a delivery person slips at the door, for example) you could be vulnerable in the event of a lawsuit. Belongings and valuables will also represent a total loss after a theft or fire.
Too much to bare
To coin a phrase, you may want to skip bare in favor of “scantily clad.” Raising your deductible can lower your premiums, and there’s no standardization of rates among insurers, so shopping around will often prove beneficial.
Bundling home and car insurance can save you money on both, and the III outlines 11 other strategies for bringing rates under control. Install home security, maintain a strong credit score and make sure your electrical, heating and plumbing systems are less than 10 years old.
Once you know the numbers and study the risks closely, chances are you’ll think twice before you go bare with your home — though how you go bare in your home is entirely up to you.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
