I'm Cancelling My Home Insurance

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TravelforFun
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I'm Cancelling My Home Insurance

Post by TravelforFun » Fri Feb 16, 2018 1:49 pm

Anyone on here that doesn't have a home insurance policy? What's your experience? My home is paid for and worth about 12% of my net worth and I'm thinking about canceling the homeowners policy and keeping the umbrella policy. If I cancelled and the house burned down, it would just be like a 12% market drop which I can handle. I filed one claim (hail damage) in the last 20 years.

TravelforFun

rgs92
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Re: I'm Cancelling My Home Insurance

Post by rgs92 » Fri Feb 16, 2018 1:51 pm

What about liability is someone hurts themselves on your property?
Last edited by rgs92 on Fri Feb 16, 2018 1:52 pm, edited 1 time in total.

essbeer
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Re: I'm Cancelling My Home Insurance

Post by essbeer » Fri Feb 16, 2018 1:51 pm

I though homeowners insurance was usually required for umbrella insurance, car insurance too.

Dottie57
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Re: I'm Cancelling My Home Insurance

Post by Dottie57 » Fri Feb 16, 2018 1:53 pm

TravelforFun wrote:
Fri Feb 16, 2018 1:49 pm
Anyone on here that doesn't have a home insurance policy? What's your experience? My home is paid for and worth about 12% of my net worth and I'm thinking about canceling the homeowners policy and keeping the umbrella policy. If I cancelled and the house burned down, it would just be like a 12% market drop which I can handle. I filed one claim (hail damage) in the last 20 years.

TravelforFun
I pay for insurance because if my home is destroyed I don't want to pay for it again.

novicemoney
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Re: I'm Cancelling My Home Insurance

Post by novicemoney » Fri Feb 16, 2018 1:55 pm

essbeer wrote:
Fri Feb 16, 2018 1:51 pm
I though homeowners insurance was usually required for umbrella insurance, car insurance too.
I thought this too. In fact when my son got his umbrella policy, he needed to upgrade his liability portion of his car insurance policy.

AntsOnTheMarch
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Re: I'm Cancelling My Home Insurance

Post by AntsOnTheMarch » Fri Feb 16, 2018 1:57 pm

essbeer wrote:
Fri Feb 16, 2018 1:51 pm
I though homeowners insurance was usually required for umbrella insurance, car insurance too.
I think this is correct.

Canceling home insurance seems about as bad a way to save a buck as one can think of—especially for someone with a high net worth (law suits for slip and fall, etc).

barnaclebob
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Re: I'm Cancelling My Home Insurance

Post by barnaclebob » Fri Feb 16, 2018 1:59 pm

Is just your home worth 12% or your home and all of its contents are current market replacement costs worth 12%?

Your argument goes both ways. If your home is such a small portion of your net worth them presumably the cost of insurance is hardly noticeable.
Last edited by barnaclebob on Fri Feb 16, 2018 2:06 pm, edited 3 times in total.

mgensler
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Re: I'm Cancelling My Home Insurance

Post by mgensler » Fri Feb 16, 2018 2:00 pm

You might consider lowering some of the extra coverages and increasing your deductible to get the premium down. For example, reduce the contents coverage and coverage on detached structures. Pure Insurance has a document on what to look at.

jnet2000
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Re: I'm Cancelling My Home Insurance

Post by jnet2000 » Fri Feb 16, 2018 2:00 pm

After living through the Cal fires, I think that would be crazy to do. Home insurance isn't that expensive.
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FIREchief
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Re: I'm Cancelling My Home Insurance

Post by FIREchief » Fri Feb 16, 2018 2:02 pm

I will recommend asking your insurance agent how much cheaper your homeowners would be if you chose the highest deductible available. Going from $500 to $5000 can cut the cost almost in half.
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

inbox788
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Re: I'm Cancelling My Home Insurance

Post by inbox788 » Fri Feb 16, 2018 2:03 pm

Homeowners insurance is very low risk, low claim. The main reason the cost is so high and so much is sold is that bank that own mortgages don't want to deal with their costs and liabilities, not the home risk. Plus the real estate market is very local and they've offset this cost to the homeowner. I'm surprised some lenders haven't figured out a way to absorb the homeowner insurance risk like the car rental companies that self-insure do or partnered with homeowner insurance companies. Anyway, might be good that not all the eggs are in the same basket here with such a large purchase and create some sort of systemic risk.

Individually, the risk is very low, but the liability is very high. It's the kind of insurance that like auto insurance, you want some reasonable coverage with high deductibles to minimize premiums. You can afford to do without it, but you can also afford to pay for it and reduce/minimize a low incidence/high consequence risk event. That's the happy medium IMO.

rgs92
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Re: I'm Cancelling My Home Insurance

Post by rgs92 » Fri Feb 16, 2018 2:04 pm

But if your house burns down, can you just walk away from the burned out hulK?
What if it's not sellable?
What about ongoing property taxes? How do you walk away from tax bills? It could damage your credit.
What if it's a public hazard? Don't you have some obligation to deal with this that can cost money?
Can't you get sued by the town?
This reminds me of the slumlord phenomenon all over New York in the bad old days with all the abandoned buildings.
Last edited by rgs92 on Fri Feb 16, 2018 2:07 pm, edited 3 times in total.

MikeG62
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Re: I'm Cancelling My Home Insurance

Post by MikeG62 » Fri Feb 16, 2018 2:06 pm

AntsOnTheMarch wrote:
Fri Feb 16, 2018 1:57 pm
essbeer wrote:
Fri Feb 16, 2018 1:51 pm
I though homeowners insurance was usually required for umbrella insurance, car insurance too.
I think this is correct.

Canceling home insurance seems about as bad a way to save a buck as one can think of—especially for someone with a high net worth (law suits for slip and fall, etc).
+1
Real Knowledge Comes Only From Experience

bgf
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Re: I'm Cancelling My Home Insurance

Post by bgf » Fri Feb 16, 2018 2:09 pm

not saying OP feels this way, but from so many posts on insurance, i get the feeling people generally think that insurance is a rip off. its my understanding that with commodity insurance, such as home, auto, life, the rates are incredibly competitive. there is a low barrier to entry in the commodity insurance business. the benefit of owning an insurance company is not from the profit made on the policy premium, but on the value of the 'float,' the premiums you hold before they are paid out on claims.

looking at insurance that way, you are not getting 'screwed' by an insurance company. you are paying a premium that is 'roughly' aligned with the probability and consequence of a given loss, be it your auto, home, or life.
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GibsonL6s
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Re: I'm Cancelling My Home Insurance

Post by GibsonL6s » Fri Feb 16, 2018 2:20 pm

Don't do it, not worth the catastrophic risk you have now just subjected your portfolio to. Also, I agree you need usually a minimum limit on your homeowners policy to get Umbrella liability which you should have.

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celia
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Re: I'm Cancelling My Home Insurance

Post by celia » Fri Feb 16, 2018 2:24 pm

You didn't mention WHY you want to cancel it. If it is to "save money", that is foolish. Save the same amount of money elsewhere. You could easily take a 12% hit in the markets at the same time your house burns down. The risks happen independently of each other.

Homeowners insurance usually also covers your living expenses while the house is being re-built. And the replacement house will likely cost more since it will have to be built to building codes in effect at that time.

Maybe what you want to do is shop around for 2 other quotes for the same amount of coverage. That would be a better approach.

TravelforFun
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Re: I'm Cancelling My Home Insurance

Post by TravelforFun » Fri Feb 16, 2018 2:26 pm

essbeer wrote:
Fri Feb 16, 2018 1:51 pm
I though homeowners insurance was usually required for umbrella insurance, car insurance too.
I'm not able to ascertain this yet. Will talk to my insurance company.

TravelforFun

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dm200
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Re: I'm Cancelling My Home Insurance

Post by dm200 » Fri Feb 16, 2018 2:27 pm

rgs92 wrote:
Fri Feb 16, 2018 1:51 pm
What about liability is someone hurts themselves on your property?
I agree

Set very high deductibles -

Not just "the money" such insurance provides. -- also can cut down on hassles of being sued or if a dog bites a kid, etc
Last edited by dm200 on Fri Feb 16, 2018 2:28 pm, edited 1 time in total.

Nate79
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Re: I'm Cancelling My Home Insurance

Post by Nate79 » Fri Feb 16, 2018 2:28 pm

If your home burns to the ground will you blink an eye to pay the full cost to rebuild? I know I would even if the house was ~10% of my net worth...

TravelforFun
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Re: I'm Cancelling My Home Insurance

Post by TravelforFun » Fri Feb 16, 2018 2:30 pm

celia wrote:
Fri Feb 16, 2018 2:24 pm
You didn't mention WHY you want to cancel it.
You buy insurance for something you can't afford to lose and you shouldn't buy what you don't need. I cancelled my life insurance years ago because our net worth could take care of my family if something were to happen to me.

TravelfoFun

inbox788
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Re: I'm Cancelling My Home Insurance

Post by inbox788 » Fri Feb 16, 2018 2:32 pm

TravelforFun wrote:
Fri Feb 16, 2018 2:26 pm
essbeer wrote:
Fri Feb 16, 2018 1:51 pm
I though homeowners insurance was usually required for umbrella insurance, car insurance too.
I'm not able to ascertain this yet. Will talk to my insurance company.

TravelforFun
This varies with individual companies and policies. Some allow a gap. Don't know if the ones that don't allow a gap will not cover if you inadvertently wind up with a gap, such as forgetting to pay your home or auto policy.

BH is a conservative bunch. It's not surprising the general sentiment is you're crazy to drop homeowner insurance. It's probably not wrong. If you know the cost, risk, and limits on coverage, you might come to a different conclusion. The example here is LTCI.
Last edited by inbox788 on Fri Feb 16, 2018 2:34 pm, edited 1 time in total.

visualguy
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Re: I'm Cancelling My Home Insurance

Post by visualguy » Fri Feb 16, 2018 2:39 pm

TravelforFun wrote:
Fri Feb 16, 2018 2:26 pm
essbeer wrote:
Fri Feb 16, 2018 1:51 pm
I though homeowners insurance was usually required for umbrella insurance, car insurance too.
I'm not able to ascertain this yet. Will talk to my insurance company.

TravelforFun
They typically require home and auto insurance with a certain minimum liability insurance. If you have auto, but not home, you would think that they would still honor the umbrella if the claim is auto-related and not home-related. However, they might have justification to deny the claim because you didn't maintain home insurance which is a requirement.

Seems risky unless you get umbrella from a provider that doesn't require home insurance.

I would also cancel home if I didn't need it for umbrella... If you find a provider for reasonably-priced umbrella without a requirement for home, please post.

onourway
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Re: I'm Cancelling My Home Insurance

Post by onourway » Fri Feb 16, 2018 2:41 pm

I'd say I'm less inclined to hold lots of insurance than most here. However, I don't think justifying it in the same way as a 12% drop in the market is a great comparison. If the market drops 12% probably very little changes in your life. You go on living with the assumption that the market will eventually make that loss back. Perhaps if you are in retirement you adjust your spending a bit. Having to immediately spend 12% of your net worth to re-build a house would have a far larger impact.

Homeowner's insurance runs me about $1000/year. How much was that hail claim for? Any significant part of that $20k of premiums and you've done pretty well.

adamthesmythe
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Re: I'm Cancelling My Home Insurance

Post by adamthesmythe » Fri Feb 16, 2018 2:46 pm

Hey, be my guest.

But there is a difference between a house fire and a market crash. After a market crash you still own your part of the economy, and likely the market will still go up again. That smoking hole in the ground is never going to increase in value.

jlcnuke
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Re: I'm Cancelling My Home Insurance

Post by jlcnuke » Fri Feb 16, 2018 2:47 pm

TravelforFun wrote:
Fri Feb 16, 2018 2:30 pm
celia wrote:
Fri Feb 16, 2018 2:24 pm
You didn't mention WHY you want to cancel it.
You buy insurance for something you can't afford to lose and you shouldn't buy what you don't need. I cancelled my life insurance years ago because our net worth could take care of my family if something were to happen to me.

TravelfoFun
You buy insurance to pool risk with other people. Your homeowners insurance can actually pay out much more than your home is worth. Imagine a catastrophic accident at your house that blows the place up (gas leak coupled with what the inspector says was a faulty wire the homeowner should have fixed). Then add in "someone else was there when it happened and died".

Now, you are out the cost of your home. You're out the cost of all of your belongings inside the home. You're out the cost of your attorney and you're out the damages from the wrongful death lawsuit all at one. Now, maybe the 12% wasn't hurting too much, but the lawsuit is likely to be 30-40% of your net worth gone along with it (umbrella policy being cancelled or not, they won't cover the first $XXX,XXX that should have been covered under your homeowners liability insurance). So now you're out upwards of 50% of your NW and you still have to go buy all new stuff too.

Alternatively, you can pay ~0.12% of your net worth each year to have that exact same scenario cost you your deductible (my homeowner insurance policies have always cost less than 1% of the value of the home so I'm going with those round numbers).

The latter seems like it has a much better risk:reward ratio imo.

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FIREchief
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Re: I'm Cancelling My Home Insurance

Post by FIREchief » Fri Feb 16, 2018 2:47 pm

The market always recovers on its own. A burned down house never recovers on its own.
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

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bottlecap
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Re: I'm Cancelling My Home Insurance

Post by bottlecap » Fri Feb 16, 2018 2:52 pm

FIREchief wrote:
Fri Feb 16, 2018 2:47 pm
The market always recovers on its own. A burned down house never recovers on its own.
Good point.

I think if you have enough money where you don't need home insurance, then the premium on the home insurance relative to your net worth is negligible anyway.

I suppose you can live without it, but I'm not sure why this is even on your radar screen.

JT

thx1138
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Re: I'm Cancelling My Home Insurance

Post by thx1138 » Fri Feb 16, 2018 2:54 pm

Just crank your deductible through the roof and reduce the amount of coverage on things like personal property and such. That can be a big savings and falls well into the "don't insure what you can cover yourself".

Cancelling entirely however is also removing liability protection. You are going to need that if you have a high net worth. I think you'll discover that once you raise your deductible and lower your coverage on the house itself that much of the rest of the cost is in liability. That's then going to be zero sum as far as trying to get umbrella to cover. Umbrella is relatively cheap because it is rarely excercised since the underlying policies catch most of it. Cancel homeowners or renters and now your umbrella isn't actually an "umbrella" at all as there is no liability in place for smaller claims.

The other thing you may discover is that if you do actually lose the house to a disaster of some sort that the entire system is centered around insurance. Being the only person without can make things awkward. We discovered this with no collision policy on a vehicle that was below our "worth insuring" threshold. We were at the bottom of the list at every body shop because they have established relationships with insurance companies they need to preserve by giving timely service. For some random person without insurance who they will never deal with again there was zero reason to prioritize working on our vehicle. As a result it took forever to get the work done and only a few body shops would even consider working on the vehicle. You risk a similar experience with contractors should there be a larger scale disaster in your area.

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Abe
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Re: I'm Cancelling My Home Insurance

Post by Abe » Fri Feb 16, 2018 3:02 pm

Well, I have seriously considered it. My home is paid for as is everything else I own. The value of my home is less than 2% of my net worth. I have several rental properties that are not insured.
Slow and steady wins the race.

caffeperfavore
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Re: I'm Cancelling My Home Insurance

Post by caffeperfavore » Fri Feb 16, 2018 3:04 pm

So, your house burns down and now you've lost 12% of your net worth.

Then, you have to sink another 12% of your net worth (which is now more like 14% of your net worth) into a new one?

Neato.

chrisdds98
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Re: I'm Cancelling My Home Insurance

Post by chrisdds98 » Fri Feb 16, 2018 3:10 pm

bottlecap wrote:
Fri Feb 16, 2018 2:52 pm
FIREchief wrote:
Fri Feb 16, 2018 2:47 pm
The market always recovers on its own. A burned down house never recovers on its own.
Good point.

I think if you have enough money where you don't need home insurance, then the premium on the home insurance relative to your net worth is negligible anyway.

I suppose you can live without it, but I'm not sure why this is even on your radar screen.

JT
self insuring is always cheaper which is why I never get the extended warranty on electronics. I would be ok eliminating most coverage for my house (if my net worth was high enough) but would want to keep liability. especially true if a lot of people knew about my net worth.

denovo
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Re: I'm Cancelling My Home Insurance

Post by denovo » Fri Feb 16, 2018 3:10 pm

TravelforFun wrote:
Fri Feb 16, 2018 2:26 pm
essbeer wrote:
Fri Feb 16, 2018 1:51 pm
I though homeowners insurance was usually required for umbrella insurance, car insurance too.
I'm not able to ascertain this yet. Will talk to my insurance company.

TravelforFun
All umbrella policies I know of require underlying autos and homes to have liability,
"Don't trust everything you read on the Internet"- Abraham Lincoln

thangngo
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Re: I'm Cancelling My Home Insurance

Post by thangngo » Fri Feb 16, 2018 3:14 pm

TravelforFun wrote:
Fri Feb 16, 2018 1:49 pm
Anyone on here that doesn't have a home insurance policy? What's your experience? My home is paid for and worth about 12% of my net worth and I'm thinking about canceling the homeowners policy and keeping the umbrella policy. If I cancelled and the house burned down, it would just be like a 12% market drop which I can handle. I filed one claim (hail damage) in the last 20 years.

TravelforFun
Has anyone on this board ever claimed home insurance for someone who slipped in your driveway?

Has anyone on this board ever claimed home insurance when their house burn down?

Anyone?

Car Insurance and Home Insurance (as far as replacement cost) is stupid when your net worth far exceeds the replacement cost for your car and your house. Pay insurance for things that you can afford to lose.

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bottlecap
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Re: I'm Cancelling My Home Insurance

Post by bottlecap » Fri Feb 16, 2018 3:21 pm

chrisdds98 wrote:
Fri Feb 16, 2018 3:10 pm
bottlecap wrote:
Fri Feb 16, 2018 2:52 pm
FIREchief wrote:
Fri Feb 16, 2018 2:47 pm
The market always recovers on its own. A burned down house never recovers on its own.
Good point.

I think if you have enough money where you don't need home insurance, then the premium on the home insurance relative to your net worth is negligible anyway.

I suppose you can live without it, but I'm not sure why this is even on your radar screen.

JT
self insuring is always cheaper which is why I never get the extended warranty on electronics. I would be ok eliminating most coverage for my house (if my net worth was high enough) but would want to keep liability. especially true if a lot of people knew about my net worth.
Yes. Paying zero is always cheaper than paying something.

But you also have to look at the size of the potential consequences of paying zero and decide if it's worth it to you. 12% is a big enough number for me to keep the insurance.

JT

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flamesabers
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Re: I'm Cancelling My Home Insurance

Post by flamesabers » Fri Feb 16, 2018 3:28 pm

TravelforFun wrote:
Fri Feb 16, 2018 2:30 pm
celia wrote:
Fri Feb 16, 2018 2:24 pm
You didn't mention WHY you want to cancel it.
You buy insurance for something you can't afford to lose and you shouldn't buy what you don't need. I cancelled my life insurance years ago because our net worth could take care of my family if something were to happen to me.

TravelfoFun
It's one thing to lose your house as an isolated incident, quite another if it's one piece of a cascade of bad events that hit you in a short period of time. Imagine if a significant natural disaster hits your area. You lose your house, all of the property in your house, and your car(s). Your employer lays you off because of the losses they incurred from the natural disaster. Several of your family members were severely injured and require extensive, expensive medical treatment. As when other natural disasters strike, the stock market takes a temporary hit.

If something like this did occur, do you still feel confident that you don't need home insurance?

Jags4186
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Re: I'm Cancelling My Home Insurance

Post by Jags4186 » Fri Feb 16, 2018 3:30 pm

“I’m cancelling my homeowners insurance!”

“No you’re not.”

“You got me!”

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GerryL
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Re: I'm Cancelling My Home Insurance

Post by GerryL » Fri Feb 16, 2018 3:30 pm

TravelforFun wrote:
Fri Feb 16, 2018 2:30 pm
celia wrote:
Fri Feb 16, 2018 2:24 pm
You didn't mention WHY you want to cancel it.
You buy insurance for something you can't afford to lose and you shouldn't buy what you don't need. I cancelled my life insurance years ago because our net worth could take care of my family if something were to happen to me.

TravelfoFun
What about all the stuff inside your house? Are you saying you don't have coverage for the contents of your house?
I gave up life insurance when I retired and my former employer no longer paid for it. Not a need for me. But I am not the least bit upset that I have been paying homeowners insurance now for 27+ years and my house has never burned down or even had the roof ripped off by high winds. (BTW I also have long-term care insurance and would be very happy if I live a long life and never have to use it.)

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flamesabers
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Re: I'm Cancelling My Home Insurance

Post by flamesabers » Fri Feb 16, 2018 3:37 pm

GerryL wrote:
Fri Feb 16, 2018 3:30 pm
I gave up life insurance when I retired and my former employer no longer paid for it. Not a need for me. But I am not the least bit upset that I have been paying homeowners insurance now for 27+ years and my house has never burned down or even had the roof ripped off by high winds. (BTW I also have long-term care insurance and would be very happy if I live a long life and never have to use it.)
This reminds me of the saying that insurance is something you buy but hope you never need to use.

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flossy21
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Re: I'm Cancelling My Home Insurance

Post by flossy21 » Fri Feb 16, 2018 3:39 pm

To each his own I suppose but it seems like you would basically be opening yourself up to the potential situation where a fraudster would target you for negligence.

An example might be where a passerby on the sidewalk gets hit by a rock from your lawn mower and claims multiple debilitating injuries and an inability to work for life. All it takes is one crooked personal injury lawyer and the wrong judgement and you are on the hook for a multi-million dollar judgement or, at the least, financing your own legal defense.

The point being that your exposure here could easily exceed your net worth.

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dual
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Re: I'm Cancelling My Home Insurance

Post by dual » Fri Feb 16, 2018 3:47 pm

TravelforFun wrote:
Fri Feb 16, 2018 2:30 pm
You buy insurance for something you can't afford to lose and you shouldn't buy what you don't need.
+1

I do not buy collision, comprehensive, uninsured coverage for my car. I do buy 300K/500K liability and have a $2 Million umbrella policy.

I am interested whether you will be able to get an umbrella policy without a homeowner policy. Let us know what you find out and, if you can get it, the name of your insurance. TIA

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dual
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Re: I'm Cancelling My Home Insurance

Post by dual » Fri Feb 16, 2018 3:48 pm

flossy21 wrote:
Fri Feb 16, 2018 3:39 pm
The point being that your exposure here could easily exceed your net worth.
OP says he has an umbrella policy.

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Artful Dodger
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Re: I'm Cancelling My Home Insurance

Post by Artful Dodger » Fri Feb 16, 2018 4:04 pm

thangngo wrote:
Fri Feb 16, 2018 3:14 pm
TravelforFun wrote:
Fri Feb 16, 2018 1:49 pm
Anyone on here that doesn't have a home insurance policy? What's your experience? My home is paid for and worth about 12% of my net worth and I'm thinking about canceling the homeowners policy and keeping the umbrella policy. If I cancelled and the house burned down, it would just be like a 12% market drop which I can handle. I filed one claim (hail damage) in the last 20 years.

TravelforFun
Has anyone on this board ever claimed home insurance for someone who slipped in your driveway?

Has anyone on this board ever claimed home insurance when their house burn down?

Anyone?

Car Insurance and Home Insurance (as far as replacement cost) is stupid when your net worth far exceeds the replacement cost for your car and your house. Pay insurance for things that you can afford to lose.
We've had two claims in excess of $20K within the past 15 years. One was a flood due to a plumbing break; the other was roof damage due to a hail storm. So, you don't have to have a complete loss to benefit from your home-owners policy. I guess you could say the same about health insurance.

My insurance cost equals about 1/3 of 1% of what my policy would pay if there was a total loss. That doesn't include the possibility of a liability claim.

My nephew was helping his father in law make roof repairs when he fell through a skylight. The insurance company paid medical claims and costs and money for loss of income.

As others have noted, markets come back, burned down houses don't. That roof fall could have been a lot more expensive, too. They got off easy.

TravelforFun
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Re: I'm Cancelling My Home Insurance

Post by TravelforFun » Fri Feb 16, 2018 4:07 pm

flamesabers wrote:
Fri Feb 16, 2018 3:28 pm
TravelforFun wrote:
Fri Feb 16, 2018 2:30 pm
celia wrote:
Fri Feb 16, 2018 2:24 pm
You didn't mention WHY you want to cancel it.
You buy insurance for something you can't afford to lose and you shouldn't buy what you don't need. I cancelled my life insurance years ago because our net worth could take care of my family if something were to happen to me.

TravelfoFun
It's one thing to lose your house as an isolated incident, quite another if it's one piece of a cascade of bad events that hit you in a short period of time. Imagine if a significant natural disaster hits your area. You lose your house, all of the property in your house, and your car(s). Your employer lays you off because of the losses they incurred from the natural disaster. Several of your family members were severely injured and require extensive, expensive medical treatment. As when other natural disasters strike, the stock market takes a temporary hit.
There are always risks. Hundreds of thousand of California homeowners who have no earthquake policy are in this situation. How would they manage if an earthquake strikes? I don’t live in CA so don’t know.

TravelforFun

visualguy
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Re: I'm Cancelling My Home Insurance

Post by visualguy » Fri Feb 16, 2018 4:10 pm

Some insurance companies let you trim down the home coverage to a minimum - very high deductible, very little for content and expenses, etc. You can do that while keeping the liability at the level required for umbrella. The premiums can be quite low when you do this. Companies vary on this... Farmers is an example of a company where they have a lot of knobs they can dial down on your coverage to reduce your premiums.

Another option I explored once was to get renter's insurance instead even though I'm the homeowner. There was still some question about whether the renter's liability would satisfy the umbrella requirement because it's not quite the same as homeowner's liability insurance. I decided to get bare-bones homeowner's instead.

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dm200
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Location: Washington DC area

Re: I'm Cancelling My Home Insurance

Post by dm200 » Fri Feb 16, 2018 4:14 pm

My insurance cost equals about 1/3 of 1% of what my policy would pay if there was a total loss. That doesn't include the possibility of a liability claim
.

Good way to look at this. Ours is about 1/5 of 1%.

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flamesabers
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Location: Rochester, MN

Re: I'm Cancelling My Home Insurance

Post by flamesabers » Fri Feb 16, 2018 4:18 pm

TravelforFun wrote:
Fri Feb 16, 2018 4:07 pm
There are always risks. Hundreds of thousand of California homeowners who have no earthquake policy are in this situation. How would they manage if an earthquake strikes? I don’t live in CA so don’t know.

TravelforFun
Just because other people are taking chances by foregoing home insurance doesn't mean it's a good idea for you to do the same. Are you willing to sacrifice 12% (or more) of your net worth because you thought home insurance is a waste of money?

visualguy
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Re: I'm Cancelling My Home Insurance

Post by visualguy » Fri Feb 16, 2018 4:21 pm

TravelforFun wrote:
Fri Feb 16, 2018 4:07 pm
There are always risks. Hundreds of thousand of California homeowners who have no earthquake policy are in this situation. How would they manage if an earthquake strikes? I don’t live in CA so don’t know.

TravelforFun
They would be in trouble if their house is seriously damaged in an earthquake, but since this insurance is expensive, people just put this risk in the (large) bucket of risks that you either can't insure for or that you need to pay too much to insure for.

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DaftInvestor
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Re: I'm Cancelling My Home Insurance

Post by DaftInvestor » Fri Feb 16, 2018 4:21 pm

Who's your umbrella policy with? Did you check with them to see what your rate will be WITHOUT homeowners (if they even allow it).
You may save $X per year on your home-owners but than have to pay it for your Umbrella (they may raise your rate due to the increased exposure they take on). My Umbrella policy rate is based upon the underlying home insurance and car insurance I carry.

I can't imagine losing my home + ALL my possessions and having to repay for everything else myself. What I pay in Homeowners is a fraction of a percentage of the cost of what it covers - its the best insurance value I have.

evancox10
Posts: 82
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Re: I'm Cancelling My Home Insurance

Post by evancox10 » Fri Feb 16, 2018 4:27 pm

thangngo wrote:
Fri Feb 16, 2018 3:14 pm
TravelforFun wrote:
Fri Feb 16, 2018 1:49 pm
Anyone on here that doesn't have a home insurance policy? What's your experience? My home is paid for and worth about 12% of my net worth and I'm thinking about canceling the homeowners policy and keeping the umbrella policy. If I cancelled and the house burned down, it would just be like a 12% market drop which I can handle. I filed one claim (hail damage) in the last 20 years.

TravelforFun
Has anyone on this board ever claimed home insurance for someone who slipped in your driveway?

Has anyone on this board ever claimed home insurance when their house burn down?

Anyone?

Car Insurance and Home Insurance (as far as replacement cost) is stupid when your net worth far exceeds the replacement cost for your car and your house. Pay insurance for things that you can afford to lose.

I haven't had to use liability insurance, but my very first home burned down 6 months after I bought it. An AC contractor accidentally caught the insulation on fire while soldering pipes. He didn't realize this had happened and left. I got a call from the neighbor later saying "We have your dog, but your house is on fire so you better come home!"

The insurance co. pretty quickly declared it a total write-off, both structure and contents.

No one was home at the time, so there were no injuries.
Last edited by evancox10 on Fri Feb 16, 2018 4:29 pm, edited 1 time in total.

3funder
Posts: 612
Joined: Sun Oct 15, 2017 9:35 pm

Re: I'm Cancelling My Home Insurance

Post by 3funder » Fri Feb 16, 2018 4:29 pm

TravelforFun wrote:
Fri Feb 16, 2018 1:49 pm
Anyone on here that doesn't have a home insurance policy? What's your experience? My home is paid for and worth about 12% of my net worth and I'm thinking about canceling the homeowners policy and keeping the umbrella policy. If I cancelled and the house burned down, it would just be like a 12% market drop which I can handle. I filed one claim (hail damage) in the last 20 years.

TravelforFun
Keep the homeowners policy and kick the umbrella insurance to the curb. I agree with Bogleheads about most things; umbrella insurance for someone who doesn't own a business, have a pool, or play the role of landlord isn't one of them.

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