Would You Drop Insurance To Stay Put in Your Neighborhood? Most Owners Say Yes

What would make you give up homeowners insurance?

For a growing number of Americans, that question is no longer hypothetical. More than half (58%) of homeowners say they’d consider going without insurance if the price got too high, a new survey from Realtor.com® finds—a once-unthinkable decision that’s becoming alarmingly common in today’s climate-risk-fueled market.

The timing couldn’t be worse. More than $12.7 trillion worth of U.S. real estate now faces severe or extreme climate risk, according to a recent Realtor.com Housing and Climate Risk Report. As insurers raise rates or pull out of high-risk areas altogether, homeowners are left with fewer choices, higher costs, and—sometimes—no coverage at all. Already, as many as 1 in 7 homes does not have insurance.

While skipping coverage may reduce short-term costs, the long-term risks are mounting fast.

“Uninsured homeowners risk losing out on significant home equity should their home face damage from a climate-related event,” explains Realtor.com senior economic research analyst Hannah Jones. “After a major event, owners without adequate coverage must fund repairs from savings or new debt. This risk only increases as the likelihood of climate-related events increases.”

Still, more homeowners are finding themselves backed into a corner, facing rising premiums, fewer options, and hard choices about what risks they’re willing to take to stay put.

Climate risk is colliding with a cracked insurance system

The system designed to protect homeowners is buckling under the weight of climate risk.

Already, 42% of homeowners say their insurance premiums have gone up and 88% expect those costs to keep rising. They’re not wrong to worry.

Behind the scenes, reinsurers—the companies that insure insurance companies—are sounding the alarm. Swiss Re, one of the largest reinsurers in the world, estimates that insured losses are rising by 5% to 7% annually, with a 10% chance of a $300 billion-loss year, which is three times the current baseline, Bloomberg reports. 

To prepare, reinsurers are raising prices for their policies. And insurance companies, in turn, are passing costs on to homeowners or abandoning entire markets they deem too risky.

California is a good example. Before January’s devastating wildfires, insurers large and small—from Allstate to Falls Lake—began fleeing the state. Now, others like QBE are following suit, leaving homeowners with fewer options and higher stakes.

It’s a concerning trend for homeowners trying to find affordable policies. 

When insurance companies pull out, competition shrinks. And without a healthy, diversified marketplace, it’s difficult to shop policies and get the most competitive rates and coverage. Not only does that raise the risk of being cost-burdened by your policy, but it could also create the risk of added exclusions, gaps, or surcharges.

It’s reshaping where (and how) people buy homes

As insurance costs climb and climate risks mount, buyers are rethinking not just what they can afford—but also where they’re willing to live.

Among buyers, 1 in 4 (25%) has completely changed their entire home search due to insurance concerns, while 30% have expanded their search area—a clear sign that insurance is no longer just a closing table detail, but a driving force in homebuying strategy.

Gen Z is leading the shift, with the highest likelihood (31%) of overhauling their search strategy in response to insurance challenges. Baby boomers, by contrast, are far less reactive—only 6% have changed course.

In some ways, this is exactly the market correction insurers want. By raising premiums and limiting coverage in high-risk areas, insurers hope to drive broader risk mitigation: tougher building codes, retreat from fire zones and flood plains, and fewer new builds in disaster-prone regions.

But for existing homeowners who are being priced out or deserted by their insurers, there are few choices left aside from moving. And moving isn’t easy in a market where affordability remains a major hurdle. In July, delistings outpaced inventory growth, as more sellers pulled their homes rather than accept weakening demand or higher risk premiums.

In the standoff between affordability and neighborhood identity, many are choosing to stay put, even if it means going without full protection. As the issue scales beyond individual households into whole communities, it can have devastating ripple effects, says Jones.

“Uninsured losses can turn homes into distressed properties and leave neighborhoods with empty, damaged houses that drag down supply and values. Banks may respond by tightening lending, making it harder to buy or sell. And because lower-income families are the most likely to cut back on coverage, they stand to lose the most, deepening wealth gaps and making recovery even harder,” she explains.

In other words, the insurance gap isn’t just a personal risk; it’s also a threat to the entire market.

What buyers aren’t doing—but should

Even as climate risk becomes harder to ignore, most buyers are still skipping one of the most critical steps in the home search: checking the property’s disaster risk.

Only 30% of buyers have researched natural hazard data for a home they’ve purchased or considered. Another 44% plan to, but haven’t yet.

That gap represents a major blind spot and an opportunity for the real estate industry to step up.

Understanding climate risk is far from intuitive. Terms like “100-year flood” present risk as a distant, far-off possibility, but in reality, they translate to a 1% chance every single year—high enough to justify flood insurance, even if your lender doesn’t require it.

Many buyers also assume they’re protected by default. But traditional homeowners insurance often excludes the very disasters people fear most, like floods, hurricanes, wildfires, or wind damage. These protections often require separate policies, higher deductibles, or added endorsements, all of which affect long-term cost and security.

As extreme weather becomes more frequent, buying a home without understanding the risk profile is like driving without a seat belt: The probability of the worst happening may be low, but why risk it?