1 in 4 downgrading or dropping insurance to afford necessities, 77% say they wouldn’t go without it
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A survey of 1,000 Americans has found that the majority are decreasing their auto insurance coverage and putting off big purchases to make ends meet due to “rising cost of living and fears of a looming recession.”
The Guardian Service survey found that 24%, or nearly 1 in 4 people, have downgraded or dropped insurance to free up cash, and 1 in 3 said they would temporarily go without insurance to free up funds for necessities. Thirty-five percent have delayed or canceled plans to purchase a home (22%), car (8%), or both (5%) this year.
“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,” Guardian Service’s VP Peter Kerr told PropertyCasualty360. “It’s a pretty risky tradeoff driven more by fear of debt than lack of awareness. 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. Skipping coverage during uncertain times is like cancelling your fire alarm during wildfire season.
“Rising premiums are pushing Americans to make impossible decisions,” Kerr said. “[F]or many households, insurance can feel like it’s ‘nice to have’ versus a ‘must have,’ especially for younger generations.”
The survey found that 1 in 5 would rather go without coverage than pay rising monthly premiums.
Seventy-seven percent said they view car insurance as a necessity and won’t go without it. Fifty-seven percent said the same of home insurance. Three percent said they consider car insurance a luxury and that they only keep it if they can afford it, and another 9% said it’s “nice to have” but go without it if they need to.
In the last year, 29% of respondents said they downgraded or canceled their insurance, according to the survey results. Car insurance was the No. 1 type of insurance that was downgraded or canceled at 15% followed by health (8%), homeowners (5%), pet (4%), and renters (4%). Eight percent downgraded from full coverage car insurance to liability.
On average, Americans pay $189 per month for car insurance and $169 for home insurance, according to Guardian Service.
Out of four financial worries asked about, No. 1 was “getting hit with an unexpected bill (e.g., medical, car repair, etc.)” at 36%, followed by losing employment/main source of income at 31%, falling behind on credit card/loan payements (9%), and missing rent/mortgage payment (7%).
When “things go wrong,” 37% said they trust their insurance companies to help them.
According to ValuePenguin’s “State of Auto Insurance in 2025,” which was updated Tuesday from January, car insurance prices are still expected to increase an average of 7.5% this year.
Among major insurance companies, American Family is set to hike its rates the most at 16%. Allstate is second at an 11.2% increase, followed by Liberty Mutual at 10.2%.
USAA drivers can expect an average 2.6% increase over the next year, while GEICO and Progressive are reportedly raising rates by 3.7% and 3%, respectively.
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