Several hurricanes have recently occurred, including a highly unusual one on the West Coast. Along with hurricanes, several other severe weather events have been reported lately, but The Wall Street Journal recently reported that Americans are "bailing" on homeowners insurance.

The Journal reports that 12% of homeowners opt to have no home insurance, which could become a big problem if they were to experience damage or their home was destroyed and they needed to rebuild.

When you have a mortgage, it's a requirement to have homeowners insurance, but that's not the case if your home is paid for. The number of people who don't is increasing, and just a few years ago, 92-95% of homeowners had insurance. Now, it's around 88%.

Of the people who reportedly are going without the coverage, almost half make less than $40,000 a year. This insurance coverage is increasingly expensive, especially in California and Florida, considered disaster-prone states. It's making it difficult for people to afford the costs of coverage.

According to a former FEMA administrator, most people opting out of the coverage are older or retirees, and they have to make tough decisions about what's affordable for them. If you decide between essentials like food and medicine or paying your homeowner's insurance premium, he said insurance will be one of the first costs eliminated.

There's also the assumption by many people that if something does happen to go wrong, the federal government will help. That can be a significant miscalculation because the federal government isn't designed for that role.

While it is an expense, when a household has homeowners' insurance, it will help them recover faster from a disaster and lower their financial burden in that scenario.

It's tough, though, because some experts cite climate change as the reason extreme weather is becoming more common and insurers' losses are mounting. The private sector is moving out of the places where they feel like they can't make money, so some call on the public sector to step in.

Even when insurers aren't stopping new business writing in heavily impacted areas, they are still raising prices and reducing coverage. That could affect the country because insurance may be harder even to come by.

Aon reports global insured losses from natural disasters were more than $130 billion last year. Hurricane Ian partially drove this, the second most expensive event on record, affecting Florida and Cuba with catastrophic storm surges, flooding, and wind. That event alone accounted for $50-55 billion in global insured loss.

Consumers, even when they're willing to pay for insurance, will be facing difficult choices. The available limits, the coverage that can be purchased, and deductibles will all be less appealing than what we're used to.

In most states, insurance companies have regulated pricing that limits what they can charge consumers, but they can leave the market if it's no longer going to be profitable for them.

For example, State Farm announced in May that it wouldn't be accepting any more new home insurance applications in California. Allstate announced something similar in June. Farmers Insurance, also in June, pulled out of Florida, a market facing big challenges for years.

On average, the cost of homeowners' insurance nationally is $2,777 a year. Oklahoma is the most expensive state, with an average cost of $5,317. Hawaii is the least expensive, with an average of $582 a year, but that could change because of the wildfire that just affected Maui.

From May 2021 to May 20222, 90% of homeowners saw quoted annual premiums go up compared to the year before, with Policygenius reporting an average increase of $134.

The problem could become so serious that for some homeowners, the best option is moving. That could mean staying in-state but moving to a different area or even a different part of the country altogether.

If you're considering buying a home, you also have to consider the risks of being in an area facing a significant climate risk.

In June, a Treasury report asked states to study and address climate change risks, but currently, beyond paying the price for protection or moving, there's not a lot that homeowners can do. More than likely, any changes in the insurance marketplace will have to occur on a community and national level.