Anyone with a paid off house drop homeowners insurance

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skp
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Anyone with a paid off house drop homeowners insurance

Post by skp » Tue Jun 12, 2018 4:17 pm

Every year I have the same dilemma. My home insurance is due for renewal next month. And I just hate writing a check for $700 a year for a house appraised at approx. $240,000 when I could self insure if the whole thing burned down. And I basically I don't trust insurance companies, they are out to make money. I've heard so many stories about exclusions etc. The problem is I'm terrified of dropping liability, and you can't have liability without homeowners. I'd also loose out on auto discount for having multiple policies. I've already maxed out the deductible. Anyone brave enough to just drop it?


delamer
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Re: Anyone with a paid off house drop homeowners insurance

Post by delamer » Tue Jun 12, 2018 4:22 pm

How much would it cost to rebuild?

What percentage of your liquid net worth is the rebuild cost?

skp
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Re: Anyone with a paid off house drop homeowners insurance

Post by skp » Tue Jun 12, 2018 4:23 pm

About 20%

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TheTimeLord
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Re: Anyone with a paid off house drop homeowners insurance

Post by TheTimeLord » Tue Jun 12, 2018 4:24 pm

skp wrote:
Tue Jun 12, 2018 4:17 pm
Every year I have the same dilemma. My home insurance is due for renewal next month. And I just hate writing a check for $700 a year for a house appraised at approx. $240,000 when I could self insure if the whole thing burned down. And I basically I don't trust insurance companies, they are out to make money. I've heard so many stories about exclusions etc. The problem is I'm terrified of dropping liability, and you can't have liability without homeowners. I'd also loose out on auto discount for having multiple policies. I've already maxed out the deductible. Anyone brave enough to just drop it?
I am not sure that is the word I would use.
IMHO, Investing should be about living the life you want, not avoiding the life you fear. | Run, You Clever Boy! [9085]

GAAP
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Re: Anyone with a paid off house drop homeowners insurance

Post by GAAP » Tue Jun 12, 2018 4:26 pm

Think of it as a 0.3% expense ratio -- assuming your liability is no more than the value of the house. If like me, you carry more liability than the value of the house, that ER goes down.

Is the risk of a loss that equals 240K (minus deductible) less than 0.3%? If you can find the real risk, then you could evaluate whether or not the loss of 240K plus returns is worth it.

Saying that you can self-insure does not make it a good idea...

Dottie57
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Re: Anyone with a paid off house drop homeowners insurance

Post by Dottie57 » Tue Jun 12, 2018 4:30 pm

GAAP wrote:
Tue Jun 12, 2018 4:26 pm
Think of it as a 0.3% expense ratio -- assuming your liability is no more than the value of the house. If like me, you carry more liability than the value of the house, that ER goes down.

Is the risk of a loss that equals 240K (minus deductible) less than 0.3%? If you can find the real risk, then you could evaluate whether or not the loss of 240K plus returns is worth it.

Saying that you can self-insure does not make it a good idea...
Not good idea at all. Penny wise, pound foolish.

delamer
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Re: Anyone with a paid off house drop homeowners insurance

Post by delamer » Tue Jun 12, 2018 4:31 pm

So you can insure 20% of your nest egg for $700 and you don’t think that it is worth it? (Not to mention coverage for other situations, like a fire.)

If you lose that 20%, then you reduce your potential income by 20% too.

I could see it if the rebuild was 5% of your nest egg — maybe.

But not 20%.

SelfEmployed123
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Re: Anyone with a paid off house drop homeowners insurance

Post by SelfEmployed123 » Tue Jun 12, 2018 4:31 pm

You may be able to afford to self-insure on the loss of the house. However, is the amount you would gain per year really worth the downside risk you'd be incurring? The general advice is to buy insurance for low probability, high impact events like loss of life, loss of income, loss of house, etc. You will hopefully never need to use your homeowner's insurance. Would you really want to put yourself in the position of not having it when you need it?

delamer
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Re: Anyone with a paid off house drop homeowners insurance

Post by delamer » Tue Jun 12, 2018 4:33 pm

GAAP wrote:
Tue Jun 12, 2018 4:26 pm
Think of it as a 0.3% expense ratio -- assuming your liability is no more than the value of the house. If like me, you carry more liability than the value of the house, that ER goes down.

Is the risk of a loss that equals 240K (minus deductible) less than 0.3%? If you can find the real risk, then you could evaluate whether or not the loss of 240K plus returns is worth it.

Saying that you can self-insure does not make it a good idea...

A small point — the appraised value includes the land. So the rebuilding cost isn’t $240K.

But your overall point is good.

jalbert
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Re: Anyone with a paid off house drop homeowners insurance

Post by jalbert » Tue Jun 12, 2018 4:34 pm

skp wrote:
Tue Jun 12, 2018 4:17 pm
Every year I have the same dilemma. My home insurance is due for renewal next month. And I just hate writing a check for $700 a year for a house appraised at approx. $240,000 when I could self insure if the whole thing burned down. And I basically I don't trust insurance companies, they are out to make money. I've heard so many stories about exclusions etc. The problem is I'm terrified of dropping liability, and you can't have liability without homeowners. I'd also loose out on auto discount for having multiple policies. I've already maxed out the deductible. Anyone brave enough to just drop it?
So you are paying $700/yr for both liability insurance and replacement of a $240K structure. Are you saying you can afford to “self-insure” against both or just against destruction of the structure? I think your issue is that you are assuming the liability insurance is free, and treating the $700 as covering the structure and contents.
Risk is not a guarantor of return.

jminv
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Re: Anyone with a paid off house drop homeowners insurance

Post by jminv » Tue Jun 12, 2018 4:36 pm

I wouldn’t self-insure given that the insurance cost is only 0.292% of your homes value, per year. This is quite low.

My family knew an elderly couple who went this way. The results were not good at all. The home was fire and water damaged, they’re trying to sell it for 1/8 of the pre-damage value but are likely going to have to pay to tear it down. They lived in it for a few years while it was in a terrible state as they had nowhere else to go and were ruined by liability payments resulting from the accident, really sad to see. They’re moving in with their kids now and from talking with one of the kids they’re really not pleased that the parents dropped coverage.

Another thing to think about is your neighbors and the kind of blight you could cause a neighborhood by doing this. The elderly couple I mentioned have dragged down everyone’s home values in their small neighborhood. Their home is an abomination to see. Generally if you have a total loss you could have some sort of major liability too so paying $700/year to ensure that you’re not wiped out seems like a good deal all around.
Last edited by jminv on Tue Jun 12, 2018 4:41 pm, edited 1 time in total.

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bottlecap
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Re: Anyone with a paid off house drop homeowners insurance

Post by bottlecap » Tue Jun 12, 2018 4:36 pm

I wouldn't, and I don't like paying for insurance. Can you raise your deductible?

You've basically answered your own question. You are "terrified" of not having liability insurance and must have homeowner's insurance to get the liability insurance.

I don't know why you are even thinking about dropping coverage given the above.

JT

sport
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Re: Anyone with a paid off house drop homeowners insurance

Post by sport » Tue Jun 12, 2018 4:37 pm

The liability coverage is a must. That should answer the question.

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BL
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Re: Anyone with a paid off house drop homeowners insurance

Post by BL » Tue Jun 12, 2018 4:39 pm

Never. Do you also have umbrella policy?

GAAP
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Re: Anyone with a paid off house drop homeowners insurance

Post by GAAP » Tue Jun 12, 2018 4:39 pm

delamer wrote:
Tue Jun 12, 2018 4:33 pm
GAAP wrote:
Tue Jun 12, 2018 4:26 pm
Think of it as a 0.3% expense ratio -- assuming your liability is no more than the value of the house. If like me, you carry more liability than the value of the house, that ER goes down.

Is the risk of a loss that equals 240K (minus deductible) less than 0.3%? If you can find the real risk, then you could evaluate whether or not the loss of 240K plus returns is worth it.

Saying that you can self-insure does not make it a good idea...

A small point — the appraised value includes the land. So the rebuilding cost isn’t $240K.

But your overall point is good.
True.

But I'm also guessing that the current value is not the same as the cost to rebuild to current codes -- and that OP is discounting the cost to demolish and remove whatever remains of the current structure in order to build a new one.

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Raymond
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Re: Anyone with a paid off house drop homeowners insurance

Post by Raymond » Tue Jun 12, 2018 4:43 pm

House paid off six years ago.

Still have homeowner's insurance.

You do what you like, but I don't think dropping HI will put any of us in "Profiles of Courage".
And I basically I don't trust insurance companies, they are out to make money.
Pretty hard grading standard for trustworthiness, seeing that most people work "to make money".
"Ritter, Tod und Teufel"

delamer
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Re: Anyone with a paid off house drop homeowners insurance

Post by delamer » Tue Jun 12, 2018 4:44 pm

GAAP wrote:
Tue Jun 12, 2018 4:39 pm
delamer wrote:
Tue Jun 12, 2018 4:33 pm
GAAP wrote:
Tue Jun 12, 2018 4:26 pm
Think of it as a 0.3% expense ratio -- assuming your liability is no more than the value of the house. If like me, you carry more liability than the value of the house, that ER goes down.

Is the risk of a loss that equals 240K (minus deductible) less than 0.3%? If you can find the real risk, then you could evaluate whether or not the loss of 240K plus returns is worth it.

Saying that you can self-insure does not make it a good idea...

A small point — the appraised value includes the land. So the rebuilding cost isn’t $240K.

But your overall point is good.
True.

But I'm also guessing that the current value is not the same as the cost to rebuild to current codes -- and that OP is discounting the cost to demolish and remove whatever remains of the current structure in order to build a new one.
True. :o

Not to mention the cost of living elsewhere while the house is being rebuilt.

Nate79
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Re: Anyone with a paid off house drop homeowners insurance

Post by Nate79 » Tue Jun 12, 2018 5:11 pm

Nope, never would do that. Completely foolish.

In OP's case their liquid net worth is nice but at 20% of liquid net worth means OP's net worth is only about ~$1m. Having a 20% payout would be a significant payment and I don't think it falls under the ability to self insure category. The liability issue is the major negative as well.

I'm surprised you need to own a home to have an umbrella policy. If you own a car and rent instead of own your house you can get an umbrella policy. So wouldn't an umbrella policy cover an uninsured home? Actual savings with additional liability coverage in an umbrella policy is going to eat into the $700 savings quite a bit making the annual savings even less.

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Cycle
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Re: Anyone with a paid off house drop homeowners insurance

Post by Cycle » Tue Jun 12, 2018 5:23 pm

My unit is worth 13% of my net worth, when I retire in 10 years it should be worth 4.5%. I dislike insurance, but this is one thing I won't drop. Home insurance is pretty cheap.

If you want to save insurance money, drop the car insurance and just hire rides as needed.

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jabberwockOG
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Re: Anyone with a paid off house drop homeowners insurance

Post by jabberwockOG » Tue Jun 12, 2018 5:26 pm

House insurance is a great bet because of the huge pool of folks that have it and relatively few number of large claims.

Many places to save money in life but not have home insurance is foolish. Make sure you have a reasonably high deductible and that your coverage includes full replacement cost of house and contents and adequate living costs during sometimes lengthy repair time-frame - without these 3 specific components spelled out in your coverage you at best have only very partial coverage in case of catastrophic loss.

If you have significant assets or serious earning potential suggest you also obtain a $1-2 mil umbrella policy to cover possible liability in case of accident. Umbrella's are a great deal again for various technical reasons but also because pool is large and large claims are few.

riverguy
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Re: Anyone with a paid off house drop homeowners insurance

Post by riverguy » Tue Jun 12, 2018 5:38 pm

Who would even consider this? $700/yr is incredibly cheap to insure that house.

TN_Boy
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Re: Anyone with a paid off house drop homeowners insurance

Post by TN_Boy » Tue Jun 12, 2018 5:46 pm

skp wrote:
Tue Jun 12, 2018 4:17 pm
And I basically I don't trust insurance companies, they are out to make money.
Pretty much every company I deal with is out to make money. And that's a good thing. When companies don't make money, they go out of business and all their employees have no jobs. And heck, when I go to work, frankly, I'm in it for the money.

There have been several threads on this topic, as others have noted. Most people think dropping homeowners is a seriously bad idea. You might look at raising the deductible to a high level to cut the premiums.

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Nicolas
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Re: Anyone with a paid off house drop homeowners insurance

Post by Nicolas » Tue Jun 12, 2018 5:46 pm

We paid off our mortgage 15 years ago. Rebuilding would cost perhaps 7% of net worth. Dropping homeowners never occurred to me. (Also it's lose, not loose).

Pigeon
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Re: Anyone with a paid off house drop homeowners insurance

Post by Pigeon » Tue Jun 12, 2018 8:36 pm

I doubt there are too many people who actually enjoy paying for insurance.

My elderly MIL had a pipe burst on the top floor of her house while she was away for a couple of weeks. The entire house was flooded. It had to be taken down to the studs. We had been preparing to put it on the market so we knew what it would sell for. Fortunately the insurance company took care of everything. During the reno, they found asbestos and paid for the abatement.

The cost to rebuild was much more than the selling price and it took the better part of a year. Fortunately she had a place to live or there would have been costs for living expenses.

I make extra sure to pay the insurance bill on time.

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celia
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Re: Anyone with a paid off house drop homeowners insurance

Post by celia » Tue Jun 12, 2018 8:51 pm

skp wrote:
Tue Jun 12, 2018 4:17 pm
And I basically I don't trust insurance companies, they are out to make money.
I don't think I'd WANT to insure with a company that wasn't making money. I would be worried they wouldn't be able to pay all the claims after a large disaster took place, even though their reserves would normally cover the claims for a typical year.


I know these two situations don't have equal odds, but I'd much rather pay for insurance and never have to file a claim than to NOT have insurance but NEED to file.

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Toons
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Re: Anyone with a paid off house drop homeowners insurance

Post by Toons » Tue Jun 12, 2018 8:54 pm

Paid off years ago,,,
Keep 5000 deductible.
960 a year.
It is psychological comfort for me.
:happy
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Grt2bOutdoors
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Re: Anyone with a paid off house drop homeowners insurance

Post by Grt2bOutdoors » Tue Jun 12, 2018 9:01 pm

skp wrote:
Tue Jun 12, 2018 4:17 pm
Every year I have the same dilemma. My home insurance is due for renewal next month. And I just hate writing a check for $700 a year for a house appraised at approx. $240,000 when I could self insure if the whole thing burned down. And I basically I don't trust insurance companies, they are out to make money. I've heard so many stories about exclusions etc. The problem is I'm terrified of dropping liability, and you can't have liability without homeowners. I'd also loose out on auto discount for having multiple policies. I've already maxed out the deductible. Anyone brave enough to just drop it?
You can afford $240k, great. Now, someone visits your home and gets hurt or, I’m walking by and trip on your front walk, breaking my neck and incurring significant injuries that prevents me from ever working again. My response from my attorney is: you can mail the keys to your house here. It’s not just catastrophic property damage, it’s liability insurance. Go hire an attorney - guaranteed it will cost you more than $700.

Penny wise, pound foolish. Your choice.
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MathWizard
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Re: Anyone with a paid off house drop homeowners insurance

Post by MathWizard » Tue Jun 12, 2018 9:07 pm

Paid off house.

Did not drop insurance.

RickBoglehead
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Re: Anyone with a paid off house drop homeowners insurance

Post by RickBoglehead » Tue Jun 12, 2018 9:38 pm

Really bad idea.

Yooper16
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Re: Anyone with a paid off house drop homeowners insurance

Post by Yooper16 » Tue Jun 12, 2018 9:40 pm

Don't most howeowners insurances also cover the personal property lose due to fire etc. So maybe you can easily afford to replace the house, how 'bout all the furniture, clothing, kitchen appliances etc?

S&L1940
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Re: Anyone with a paid off house drop homeowners insurance

Post by S&L1940 » Tue Jun 12, 2018 9:44 pm

jalbert wrote:
Tue Jun 12, 2018 4:34 pm
skp wrote:
Tue Jun 12, 2018 4:17 pm
Every year I have the same dilemma. My home insurance is due for renewal next month. And I just hate writing a check for $700 a year for a house appraised at approx. $240,000 when I could self insure if the whole thing burned down. And I basically I don't trust insurance companies, they are out to make money. I've heard so many stories about exclusions etc. The problem is I'm terrified of dropping liability, and you can't have liability without homeowners. I'd also loose out on auto discount for having multiple policies. I've already maxed out the deductible. Anyone brave enough to just drop it?
So you are paying $700/yr for both liability insurance and replacement of a $240K structure. Are you saying you can afford to “self-insure” against both or just against destruction of the structure? I think your issue is that you are assuming the liability insurance is free, and treating the $700 as covering the structure and contents.
Has anyone mentioned furniture, appliances - including heating and cooling unit, personal possessions - like you know, clothing, linen, dishes, money tucked away in the mattress, auto(s) in garage or driveway, living expenses while home is rebuilt? Concrete block home need not be totally destroyed, simply declared a damaged unsafe structure with plumbing and electric and roof gone.
Our insurance with hurricane coverage has been running in the $1500 to $1800 range. Yes, love to drop it along with our Medicare A, B, D and Medigap insurance which runs close to $10K; we could really live it up and pass along much dollars to the kids.
To the OP, no, not us.
Don't it always seem to go * That you don't know what you've got * Till it's gone

BarbK
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Re: Anyone with a paid off house drop homeowners insurance

Post by BarbK » Tue Jun 12, 2018 11:27 pm

You can get a liability only policy. The last time I looked it was about $300. But $700 for your entire house including liability is dirt cheap.

This year, I removed insuring the interior contents and reduced my premium by $1K so it is the same as it was in 2017. I have huge deductibles and would love a $700 policy vs a $700-$1k yearly increase.

Nate79
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Re: Anyone with a paid off house drop homeowners insurance

Post by Nate79 » Tue Jun 12, 2018 11:37 pm

S&L1940 wrote:
Tue Jun 12, 2018 9:44 pm
jalbert wrote:
Tue Jun 12, 2018 4:34 pm
skp wrote:
Tue Jun 12, 2018 4:17 pm
Every year I have the same dilemma. My home insurance is due for renewal next month. And I just hate writing a check for $700 a year for a house appraised at approx. $240,000 when I could self insure if the whole thing burned down. And I basically I don't trust insurance companies, they are out to make money. I've heard so many stories about exclusions etc. The problem is I'm terrified of dropping liability, and you can't have liability without homeowners. I'd also loose out on auto discount for having multiple policies. I've already maxed out the deductible. Anyone brave enough to just drop it?
So you are paying $700/yr for both liability insurance and replacement of a $240K structure. Are you saying you can afford to “self-insure” against both or just against destruction of the structure? I think your issue is that you are assuming the liability insurance is free, and treating the $700 as covering the structure and contents.
Has anyone mentioned furniture, appliances - including heating and cooling unit, personal possessions - like you know, clothing, linen, dishes, money tucked away in the mattress, auto(s) in garage or driveway, living expenses while home is rebuilt? Concrete block home need not be totally destroyed, simply declared a damaged unsafe structure with plumbing and electric and roof gone.
Our insurance with hurricane coverage has been running in the $1500 to $1800 range. Yes, love to drop it along with our Medicare A, B, D and Medigap insurance which runs close to $10K; we could really live it up and pass along much dollars to the kids.
To the OP, no, not us.

Great point. It is not just the structures but the contents as well.

Wricha
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Re: Anyone with a paid off house drop homeowners insurance

Post by Wricha » Wed Jun 13, 2018 8:39 am

Slightly different. I have a condo in FL USAA would not write Insurance on it. I came to find out that many of the large insurance companies will not take on additional Florida homes. Then I moved down a couple of teirs and found a “local”insurance company who would. My major concern if a really big hurricane (condo is a few years old) hit. Thinking on it if a big hurricane hit what are the chances that this local company will have resources to pay the claim? Probably very low. So now I am paying $1700/yr (for interior only) for a potential water leak. I decided to go bare on insurance. The Home owners association pays for structural damage (again if this condo goes down is there going to be money available?) it’s very large building. Doubtful only one building in FL will go down. In you case depending on what % your house represents of your net worth I would probably keep it.

Rupert
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Re: Anyone with a paid off house drop homeowners insurance

Post by Rupert » Wed Jun 13, 2018 8:49 am

Wricha wrote:
Wed Jun 13, 2018 8:39 am
Slightly different. I have a condo in FL USAA would not write Insurance on it. I came to find out that many of the large insurance companies will not take on additional Florida homes. Then I moved down a couple of teirs and found a “local”insurance company who would. My major concern if a really big hurricane (condo is a few years old) hit. Thinking on it if a big hurricane hit what are the chances that this local company will have resources to pay the claim? Probably very low. So now I am paying $1700/yr (for interior only) for a potential water leak. I decided to go bare on insurance. The Home owners association pays for structural damage (again if this condo goes down is there going to be money available?) it’s very large building. Doubtful only one building in FL will go down. In you case depending on what % your house represents of your net worth I would probably keep it.
Insurance companies, even "local" ones, have reinsurance to help them pay claims in the event of widespread catastrophe. So I don't understand why you think they wouldn't have the money to play claims. You are uninsured with respect to the event -- a hurricane -- most likely to actually affect you and result in a total loss. In FL, that's the one event you definitely do want insurance coverage for.

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goingup
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Re: Anyone with a paid off house drop homeowners insurance

Post by goingup » Wed Jun 13, 2018 8:59 am

We have very high deductibles on home insurance. For our Seattle area home the deductible is 2% ($8K) through USAA. Raise your deductible to partially "self-insure" without being liable for the whole disaster. :beer

cherijoh
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Re: Anyone with a paid off house drop homeowners insurance

Post by cherijoh » Wed Jun 13, 2018 9:32 am

bottlecap wrote:
Tue Jun 12, 2018 4:36 pm
I wouldn't, and I don't like paying for insurance. Can you raise your deductible?

You've basically answered your own question. You are "terrified" of not having liability insurance and must have homeowner's insurance to get the liability insurance.

I don't know why you are even thinking about dropping coverage given the above.

JT
+1
You should only self-insure when you actually know the total amount of money at risk. So that would include things like dropping comprehensive coverage on your auto insurance or increasing your deductible on any type of insurance - NOT dropping an insurance policy that you can easily pay to afford because "you hate insurance companies."

Another thing to keep in mind is that unless your house was damaged in a one-off incident (like a kitchen fire burning down your house), you would also be at the end of the line every step of the way in getting your house rebuilt. If a tree fell on your roof because of a tropical storm/hurricane that effected a wide swath of your local area, good luck finding contractors as an unisured homeowner.

wilson08
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Re: Anyone with a paid off house drop homeowners insurance

Post by wilson08 » Wed Jun 13, 2018 9:39 am

I would cheerfully write the $700 check each year for the peace
of mind it would give me. That is not a bad rate for a $240,000
home.

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Sandtrap
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Re: Anyone with a paid off house drop homeowners insurance

Post by Sandtrap » Wed Jun 13, 2018 9:39 am

My home was purchased in cash
Therefore.
With no homeowners insurance. . . I have more to lose (1 mil) than to gain (annual premiums).

plus. . . peace of mind.

aloha,
j

tampaite
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Re: Anyone with a paid off house drop homeowners insurance

Post by tampaite » Wed Jun 13, 2018 10:02 am

skp wrote:
Tue Jun 12, 2018 4:17 pm
Every year I have the same dilemma. My home insurance is due for renewal next month. And I just hate writing a check for $700 a year for a house appraised at approx. $240,000 when I could self insure if the whole thing burned down. And I basically I don't trust insurance companies, they are out to make money. I've heard so many stories about exclusions etc. The problem is I'm terrified of dropping liability, and you can't have liability without homeowners. I'd also loose out on auto discount for having multiple policies. I've already maxed out the deductible. Anyone brave enough to just drop it?
I know several who did forgo insurance once home is paid off. very few insurance companies are A+ rated.

skp
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Re: Anyone with a paid off house drop homeowners insurance

Post by skp » Wed Jun 13, 2018 11:27 am

OP here. When I say insurance companies are out to make money, basically that means I don't trust them to pay. I feel like I am paying for something that I can't count on. A coworker has paid for what she thought was very good home owners insurance. She described it as very expensive "deluxe" homeowners insurance. She recent had a robbery with expensive jewelry stolen. Her claim was denied. There are so many exclusions on policies that the idea that your home is actually insured seems ludicrous, there are limits as to how many claims you can make before your insurance will be cancelled all together, and if you do file your rates increase. When I write that check, I am paying for insurance and don't feel insured.
I do have the highest deductible I could get- I think it's $5000, but on the other hand I have the highest liability coverage I can get. I do not have umbrella insurance.

GAAP
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Re: Anyone with a paid off house drop homeowners insurance

Post by GAAP » Wed Jun 13, 2018 11:30 am

skp wrote:
Wed Jun 13, 2018 11:27 am
She recent had a robbery with expensive jewelry stolen. Her claim was denied.
Unless she specifically paid for coverage on that expensive jewelry by declaring a value for it, it is easily likely she hit the fairly low standard coverage. My guess is that she got what she paid for -- but didn't actually understand what that was.

magazinewriter
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Re: Anyone with a paid off house drop homeowners insurance

Post by magazinewriter » Wed Jun 13, 2018 11:30 am

I inherited my mother’s house (value $250k at most) six months ago and have slowly been decluttering/cleaning it. I was HAPPY to pay the $1,600 insurance cost (Florida a few miles from the Gulf) just for the liability and peace of mind. I have my own paid-for house and pay a similar insurance cost. Plus I have an umbrella policy.

$700 a year is nothing.

Rupert
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Re: Anyone with a paid off house drop homeowners insurance

Post by Rupert » Wed Jun 13, 2018 11:32 am

skp wrote:
Wed Jun 13, 2018 11:27 am
OP here. When I say insurance companies are out to make money, basically that means I don't trust them to pay. I feel like I am paying for something that I can't count on. A coworker has paid for what she thought was very good home owners insurance. She described it as very expensive "deluxe" homeowners insurance. She recent had a robbery with expensive jewelry stolen. Her claim was denied. There are so many exclusions on policies that the idea that your home is actually insured seems ludicrous, there are limits as to how many claims you can make before your insurance will be cancelled all together, and if you do file your rates increase. When I write that check, I am paying for insurance and don't feel insured.
I do have the highest deductible I could get- I think it's $5000, but on the other hand I have the highest liability coverage I can get. I do not have umbrella insurance.
It's common knowledge that HO policies don't cover expensive jewelry. You have to buy a rider for that. You're rationalizing your decision. Absolutely no one who has commented agrees with you. But you make your choices and you take your chances.

skp
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Re: Anyone with a paid off house drop homeowners insurance

Post by skp » Wed Jun 13, 2018 11:45 am

I have read everyones replies. I am going to renew the policy. I would feel better if I actually felt like I was insured.

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bottlecap
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Re: Anyone with a paid off house drop homeowners insurance

Post by bottlecap » Wed Jun 13, 2018 11:58 am

skp wrote:
Wed Jun 13, 2018 11:45 am
I have read everyones replies. I am going to renew the policy. I would feel better if I actually felt like I was insured.
You are insured. But read your policy to know what you are insured against. Your friend didn’t.

Even expensive insurance doesn’t cover things that are excluded from coverage. Things that not everyone has, like expensive jewelry, are not included in the price of coverage.

Honestly, it’s a great idea to review your policy every year. It states what is covered and what is excluded. I bet almost no one does, including me.

JT

indexonlyplease
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Re: Anyone with a paid off house drop homeowners insurance

Post by indexonlyplease » Wed Jun 13, 2018 12:08 pm

I consider insurance a cheap cost to cover any possible loss. I pay for it like life insurance but I hope I never have to use it. I am sure if you cancelled the insurance than your house burned down you would wish you still had the insurance.

My house has been paid off for years and I still pay the $3000.00 a yr to keep the insurance with a $10000.00 hurricane detectable.

jdoosey
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Re: Anyone with a paid off house drop homeowners insurance

Post by jdoosey » Wed Jun 13, 2018 12:10 pm

Don't cancel. This is exactly what insurance is for (infrequent but high dollar loss events). Call your carrier and see if their underwriters will increase deductible to $10,000 or $20,000. Deductible at this level will significantly reduce annual homeownerspremium while you incur $20k of exposure not $300k, $400k, etc.

Take part of the premium savings and get $2,000,000 excess umbrella coverage for your auto and homeowners policies with same carrier (s/b circa $250/ year).

You are more at risk of getting sued from auto accident then losing your home. Excess umbrella cover value should be equal to dollar value of your investment portfolio.

Jack FFR1846
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Re: Anyone with a paid off house drop homeowners insurance

Post by Jack FFR1846 » Wed Jun 13, 2018 12:43 pm

skp wrote:
Wed Jun 13, 2018 11:27 am
OP here. When I say insurance companies are out to make money, basically that means I don't trust them to pay. I feel like I am paying for something that I can't count on. A coworker has paid for what she thought was very good home owners insurance. She described it as very expensive "deluxe" homeowners insurance. She recent had a robbery with expensive jewelry stolen. Her claim was denied. There are so many exclusions on policies that the idea that your home is actually insured seems ludicrous, there are limits as to how many claims you can make before your insurance will be cancelled all together, and if you do file your rates increase. When I write that check, I am paying for insurance and don't feel insured.
I do have the highest deductible I could get- I think it's $5000, but on the other hand I have the highest liability coverage I can get. I do not have umbrella insurance.
Did she read her policy? Did she understand her policy?

Most people are looking for the cheapest premium policy they can find. A good agent will explain the most appropriate coverage and why it is appropriate. If I buy a homeowners policy *assuming* that the 1963 SWB 250 California Spider in the garage is covered, I'd be both wrong and stupid. *assuming* that expensive jewelry is covered without specifically looking for coverage of same is at least ignorant.

My house has been paid off for over 15 years. I would never dream of dropping homeowner's insurance nor my added umbrella policy. Not only would I not want to pay out of pocket if the house burned down, I would not want to give my house to someone who suffered an injury or death on my property and then I was sued for liability. I know how much lawyers cost. I have no interest in paying one because I'm not willing to pay the evil insurance company to assume some of my risk.
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