Property insurance costs have gotten so high in Miami, that more than one-in-every-five homes do not have coverage, a study from Valuepenguin found.
Nationwide, in the nation's 50 largest metro areas, homeowners spend an average of 7% of their expenses on property insurance.
But in Miami, 13.1% of monthly homeownership costs go toward coverage, followed closely by Oklahoma City at 13% and Tampa at 11.6%.
Meanwhile three-quarters of recent and potential future homebuyers are concerned that homeowners' insurance
Valuepenguin, a personal finance site owned by Lendingtree, used the Integrated Public Use Microdata Series for its study. The series is a subset of the U.S. Census Bureau's data.
What does property insurance entail
Property insurance includes homeowner, fire, hazard and flood coverage in the total expense, while the total cost adds in mortgage payments, property taxes, utilities, and if applicable, condo fees and mobile home outlays.
Based on national averages, monthly homeownership costs $2,077.58, including $145.66 in property insurance. This insurance cost is approximately 2% of the $7,205.21 average monthly household income.
The insurance amount seems like a reasonable average cost, said Rob Bhatt, Valuepenguin's home insurance expert and licensed agent, in the report.
However, the average fails to reflect the price volatility between markets.
"Several parts of the country have seen the cost of home insurance — a type of property insurance — go up by a significantly higher amount than income growth," Bhatt said. "In these areas, the rising cost is putting strains on families' budgets."
A recent study from ICE Mortgage Technology put the
The role of natural disasters in rising insurance costs
While Miami, Tampa and other parts of Florida are subject to hurricanes like
"We've seen an uptick in the number and severity of these extreme weather events," said Bhatt, which means "insurance companies have had to pay to rebuild more homes than normal. Meanwhile, inflation has made the cost of rebuilding each home more expensive."
As part of the spiral, as claim amounts rise, so do premiums.
An earlier study from Guardian Service, an insurance brokerage, noted 71% of homeowners it surveyed were postponing renovations or repairs in order to keep costs down, as several reduce coverage or take a higher deductible.
This report noted Gen Z was the group most impacted by these rising expenses.
Why insurance costs make up a lower share in California
On the other hand, the high cost of living in California also has reduced the percentage share which property insurance makes up: San Jose is at 3.5%, neighboring San Francisco was at 4.3%, while Los Angeles was at 4.6%. Even
Of those largest metro areas with the highest rate of uninsured homes, four of the top 6 are in Florida. Miami leads the way with a 20.8% rate, followed by Tampa at 18.1%. Birmingham, Alabama is third at 17.3% with San Antonio, Texas next at 15.8%.
Jacksonville is fifth at 15.2% while Orlando is tied for sixth with Houston at 14.9%.
In the Realtor.com study, just under nine-in-10, 88% believe they will pay more for homeowners' insurance in the future, with 42% saying they have already experienced an increase in costs.
At the same time 58% said they would or are likely to forego homeowners' insurance, if the costs become too high.
However, for Gen Z homebuyers, three-quarters of them said they would not get this coverage, even as it is
Both Fannie Mae and Freddie Mac require replacement cost value homeowners insurance for the mortgages they purchase, rather than the cheaper actual cost value.
"Homeowners are looking for strategies to lower costs including adjusting their home searches and potentially short-charging or forgoing coverage altogether," Danielle Hale, chief economist at Realtor.com, said in a press release.
