Consumers Making Insurance Cuts to Pay for Monthly Expenses

Imagine this — insurance as a consumer luxury. It’s hard to do but the insurance quoting firm, Guardian Service took a look at insurance purchasing in 2025 and found 29% of consumers have either downgraded or canceled insurance coverage.

Paying for essentials is the reason.

Guardian Service VP Peter Kerr said the most common cut comes to auto insurance seeing an average drop of 15%. Of that 15%, over half — 8% — dropped their coverage completely.

“Many households are ditching full car coverage for liability-only plans, so they’re essentially gambling with their financial future just to manage today’s bills,” Kerr said. “It’s a pretty risky tradeoff driven more by fear of debt than lack of awareness.”

Inflation plays a big part in the drop or reduction.

“It can sometimes be easy to see insurance as optional when finances are tight, but in all seriousness, that’s when protection is the most valuable,” Kerr said. “Skipping coverage during uncertain times is like cancelling your fire alarm during wildfire season.”

When it comes to rising premiums, 20% of the consumers surveyed said they’d rather have no coverage than pay for what they believe are unreasonable rate hikes. Just 37% say they trust insurance companies to take care of them when things go wrong.

“Rising premiums are pushing Americans to make impossible decisions,” Kerr said. “It’s not just about dropping policies, it’s about the fundamental reshuffling of your financial priorities. Americans are facing tough choices right now, and for many households, insurance can feel like its, ‘nice to have’ versus a ‘must have,’ especially for younger generations.”

When it comes to defining both home and auto insurance here’s what the survey found:

• 6% says it’s a luxury and only to be purchased if its affordable
• 3% of consumers think auto insurance is a luxury only to be purchased if it’s affordable
• 19% say homeowners or renters insurance is nice to have but if needed can be canceled
• 9% have the same point of view about auto insurance
• 57% say homeowners or renters insurance is a necessity
• 77% feel the same about auto insurance

As a national average, we pay $169 a month for homeowners insurance and $189 for auto insurance.

Source link: PropertyCasualty360.com — https://bit.ly/4lwfmKn