Credit: fizkes/Adobe Stock
Insurance has become a luxury for U.S. consumers in 2025 after 29% downgraded or canceled some form of coverage over the past year to afford essentials like rent and groceries, according to a report by Guardian Service.
The most common cut was car insurance at a 15% scale back, the data showed, with 8% of that total dropping full coverage for liability only, leaving them more financially exposed in the event of an accident.
“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,” he said. “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.”
Despite the risks, one in five consumers say they would rather have no coverage than pay for rising monthly premiums. At the same time, just 37% say they trust insurance companies will help 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,” he added. “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.”
How Americans view home and car insurance:
- A luxury—I only keep it if I can afford it. 6% of consumer view on homeowners and renters insurance. 3% of consumer view on car insurance.
- A nice-to-have—important, but I’d skip if needed. 19% of consumer view on homeowners and renters insurance. 9% of consumer view on car insurance.
- A necessity—I wouldn’t go without it. 57% of consumer view on homeowners and renters insurance. 77% of consumer view on car insurance.
- N/A—I don’t have this insurance. 18% of consumer view on homeowners and renters insurance. 11% of consumer view on car insurance.
In 2025, Americans pay an average of $169 for home insurance and $189 for car insurance per month.
© Touchpoint Markets, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.