Anyone with a paid off house drop homeowners insurance

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

Post by NotWhoYouThink » Wed Jun 13, 2018 12:49 pm

Your $700 probably doesn't cover flood damage, you need a separate policy for that. It probably doesn't cover earthquake damage, you need to pay extra for that and if you paid any attention at all you would know whether you had it.

An insurance policy doesn't make all your problems go away with no further effort on your part, no company provides that. You have to decide what coverage you want and need, ask questions, and pay attention to the answers. And read at least the summary pages of the policy.

Insurance companies do pay claims, all the time. Fire is a big one, trees falling is another popular one.

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

Post by talzara » Wed Jun 13, 2018 1:10 pm

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.
Rupert wrote:
Wed Jun 13, 2018 8:49 am
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.
No insurance company in Florida carries enough reinsurance to survive a repeat of 2004-2005, when four major hurricanes hit the state within 15 months. This was the event that caused the national insurance companies to leave Florida.

Florida experienced no major hurricanes for another 12 years, so the local insurance companies have been able to build up substantial reserves. The best-capitalized of them have enough reinsurance and reserves to survive two hurricanes. They were able to survive Hurricane Irma in 2017, but they will go bankrupt if four major hurricanes hit Florida in 15 months.

The exceptions are USAA policies and grandfathered policies, which can draw on the insurer's national reserves. However, the OP has already been turned down by USAA.

Hurricanes in Florida bear a resemblance to earthquakes in California. You cannot buy insurance against the worst-case scenario. You can only buy insurance against a typical natural disaster.

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

Post by samsoes » Wed Jun 13, 2018 1:13 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?
Not a chance. Ever.

As you mentioned, homeowners also protects you against personal liability.

Can you self-insure against 500k liability judgement?
Last edited by samsoes on Wed Jun 13, 2018 1:15 pm, edited 1 time in total.
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JoeRetire
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Re: Anyone with a paid off house drop homeowners insurance

Post by JoeRetire » Wed Jun 13, 2018 1:14 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.
Aren't all for-profit companies out to make money?

Insurance is a way to transfer risk to someone other than yourself, at a cost. If you don't want to pay the $700, then just pocket the premiums, keep the associated risk and hope you get lucky.

It's not what I would ever do.

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

Post by Rupert » Wed Jun 13, 2018 1:17 pm

talzara wrote:
Wed Jun 13, 2018 1:10 pm
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.
Rupert wrote:
Wed Jun 13, 2018 8:49 am
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.
No insurance company in Florida carries enough reinsurance to survive a repeat of 2004-2005, when four major hurricanes hit the state within 15 months. This was the event that caused the national insurance companies to leave Florida.

Florida experienced no major hurricanes for another 12 years, so the local insurance companies have been able to build up substantial reserves. The best-capitalized of them have enough reinsurance and reserves to survive two hurricanes. They were able to survive Hurricane Irma in 2017, but they will go bankrupt if four major hurricanes hit Florida in 15 months.

The exceptions are USAA policies and grandfathered policies, which can draw on the insurer's national reserves. However, the OP has already been turned down by USAA.

Hurricanes in Florida bear a resemblance to earthquakes in California. You cannot buy insurance against the worst-case scenario. You can only buy insurance against a typical natural disaster.
I actually lived through that period on the Gulf Coast. I remember vividly the big insurers dropping policies and withdrawing from the region (I'll never do business with Allstate again as a result), but I don't recall any of them not paying claims because they had insufficient reserves. (Now, they fought claims if they believed they resulted from flood damage, not wind, but that's a different issue.)

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

Post by JoeRetire » Wed Jun 13, 2018 1:18 pm

delamer wrote:
Tue Jun 12, 2018 4:33 pm
A small point — the appraised value includes the land. So the rebuilding cost isn’t $240K.
Of course the appraised value doesn't include the cost of where you will live while your house is being rebuilt either.

p14175
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Re: Anyone with a paid off house drop homeowners insurance

Post by p14175 » Wed Jun 13, 2018 1:48 pm

I would never drop homeowners insurance, but I would definitely consider dropping that hidden tax called FEMA Flood Insurance. That is, unless I lived in a place that actually flooded on a regular basis.

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Artful Dodger
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Re: Anyone with a paid off house drop homeowners insurance

Post by Artful Dodger » Wed Jun 13, 2018 2:16 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?
As others have said, this is not a wise move. A total claim will pay you $240,000 for the house plus likely $30,000 to $60,000 for loss of contents, plus all your living expenses while your home is being rebuilt. Plus you have the liability coverage you mention. My brother in law was being helped by his adult son to make repairs, and his son fell through the roof. His sons medical claims were paid and six months living expenses were paid due to not being able to work. His son likely could have sued for more and got more.

I don't know which insurance companies you are referring to, but any company I have used for either homeowners or auto have always come through fairly when claim time came. For reference, we have been in our home for 24 years. We've had two claims in excess of $20,000 each that were paid to our total satisfaction. We had negligible auto claims, but last fall had a 2007 Tucson determined to be totaled by our insurer and received a check for $4900 ($5400 value minus a $500 deductible). This was a car I wouldn't have given $2500 for.

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

Post by GuyInFL » Wed Jun 13, 2018 3:34 pm

I read about some folks in Hawaii who did that. It didn’t end well.

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dm200
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Re: Anyone with a paid off house drop homeowners insurance

Post by dm200 » Wed Jun 13, 2018 3:46 pm

My HO deductible is 1 or 2% of the insured value - so as the home replacement value goes up, so does the deductible. That saves quite a bit on the premium.

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

Post by talzara » Wed Jun 13, 2018 4:24 pm

Rupert wrote:
Wed Jun 13, 2018 1:17 pm
I actually lived through that period on the Gulf Coast. I remember vividly the big insurers dropping policies and withdrawing from the region (I'll never do business with Allstate again as a result), but I don't recall any of them not paying claims because they had insufficient reserves. (Now, they fought claims if they believed they resulted from flood damage, not wind, but that's a different issue.)
Past performance is no guarantee of future results.

Before the 2004-2005 hurricanes, 8 of the top 10 homeowners insurers in Florida were large national companies. The other 2 were Florida companies. The largest Florida company went bankrupt; the other one survived.

Today, only 2 of the top 10 homeowners insurers in Florida are large national companies, and the other 8 are Florida companies. One of them is State Farm Florida, a single-state subsidiary that exists to avoid exposing State Farm's national reserves to Florida.

Florida had 12 years without a major hurricane. Insured losses in Florida from Hurricane Irma in 2017 are now estimated at less than $8 billion. The best-capitalized Florida companies can now survive two hurricanes without going bankrupt, so they just need another 12 years of good weather to survive four hurricanes.

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

Post by NotWhoYouThink » Wed Jun 13, 2018 4:49 pm

GuyInFL wrote:
Wed Jun 13, 2018 3:34 pm
I read about some folks in Hawaii who did that. It didn’t end well.
Lava damage is probably not covered in HI. Which is what made those neighborhoods affordable.

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

Post by jalbert » Wed Jun 13, 2018 5:10 pm

Curious, if a house burned to the ground and the fire spread to a neighbor’s house, and the neighbor’s insurance company determined the fire was cause by the homeowner of the first house, would the neighbor’s insurance company slap a lien on the owner of the first house to recoup their loss from payout on the neighbor’s house fire?

I’m inclined to believe that would be the case.
Risk is not a guarantor of return.

bigdav160
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Re: Anyone with a paid off house drop homeowners insurance

Post by bigdav160 » Wed Jun 13, 2018 6:54 pm

Call me a fool if you like but I dropped my homeowners insurance, on a similar valued home, 10 years ago when the premiums went to $4500 year. And this was with a 5% deductible.

I don't regret it. It does cause me to be much more diligent on maintenance and upkeep.

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

Post by neilpilot » Wed Jun 13, 2018 7:15 pm

bigdav160 wrote:
Wed Jun 13, 2018 6:54 pm
Call me a fool if you like but I dropped my homeowners insurance, on a similar valued home, 10 years ago when the premiums went to $4500 year. And this was with a 5% deductible.

I don't regret it. It does cause me to be much more diligent on maintenance and upkeep.
Similar home value to the OP? If my premium was $4500 I might have pause, even though I'd still be concerned about bridging my liability coverage to my umbrella policy. But if you were at the $700 premium of the OP, I'd consider calling you a fool.

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

Post by gasdoc » Wed Jun 13, 2018 7:18 pm

I am more concerned with the liability part of the insurance. If I am sued, not only do I want the coverage, but I want the insurance company's lawyers helping me out with the claim.

gas doc

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

Post by Rupert » Wed Jun 13, 2018 7:20 pm

jalbert wrote:
Wed Jun 13, 2018 5:10 pm
Curious, if a house burned to the ground and the fire spread to a neighbor’s house, and the neighbor’s insurance company determined the fire was cause by the homeowner of the first house, would the neighbor’s insurance company slap a lien on the owner of the first house to recoup their loss from payout on the neighbor’s house fire?

I’m inclined to believe that would be the case.
Well, they would have to successfully sue the owner for something first -- negligence, an intentional tort, etc. Insurance companies can't just slap liens on houses because they conclude the owner is liable. If the fire was started by a lightening strike or some other act of god, I think the neighbor is out of luck.

tesuzuki2002
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Re: Anyone with a paid off house drop homeowners insurance

Post by tesuzuki2002 » Wed Jun 13, 2018 7:29 pm

delamer wrote:
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%.
This!!! Just like any single investment. Never put more than 5% of the portfolio at risk of losing. You can do it.. yes.. but that $700 seems like good insurance on 20% of your life portfolio.

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

Post by jalbert » Wed Jun 13, 2018 7:29 pm

Well, they would have to successfully sue the owner for something first -- negligence, an intentional tort, etc.
Yes. If the fire was caused by negligence of the homeowner, I’d expect the neighbor’s insurance company to sue. The lien would not be attached to the house, but to the owner if they did not have the funds to pay.
Risk is not a guarantor of return.

TallBoy29er
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Re: Anyone with a paid off house drop homeowners insurance

Post by TallBoy29er » Wed Jun 13, 2018 7:42 pm

Cra cra

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

Post by Finridge » Wed Jun 13, 2018 8:34 pm

Keep homeowner's insurance, but shop around for the best deal. Also go with the highest deductible that they will allow. This will considerably reduce your costs.

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

Post by ytm » Wed Jun 13, 2018 9:09 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. . . but on the other hand I have the highest liability coverage I can get. I do not have umbrella insurance.
Another note about having liability coverage. I asked my insurance agent recently about hiring a contractor to paint our house. Her instructions:

Be sure to get a certificate of insurance from your contractor's insurance agent, with a waiver of subrogation for general liability and workers compensation. The certificate must be issued with your
name as the Certificate Holder, as close to the work date as possible. If you don't have the subrogation waivers and are liable for an accident during the project, the contractor's insurance company can sue you for a worker's injuries.

If your neighbor is painting his home himself and needs to put his ladder on your property to paint a section of his house, you are exposing yourself to risks if you allow access. He is covered by his homeowner's insurance if he has an accident, but if you are found liable, his insurance company will sue you to recover their costs. Tell the neighbor you can allow access only if hires a contractor to paint that section so his contractor's agent can issue certificates of insurance with waivers to both of you.

If you don't have the commercial insurance waivers, at least your homeowners/umbrella policy would pay up to your coverage limits.

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

Post by birdy » Wed Jun 13, 2018 11:19 pm

My house long ago paid off. Still keeping insurance!

New roof in 2011 due to hail
New roof being put on in 2 weeks due to hail ($18,000.)

I could pay for the cost myself also, but that's what insurance is for!

birdy

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

Post by AlphaLess » Wed Jun 13, 2018 11:25 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 are significantly underestimating the risk.

Firstly, home insurance is not just repair insurance for hazards.
It is also insurance for liability.

Secondly, if you have HOME_VALUE * 5 assets, you need to buy additional liability, like an umbrella policy.
In case of a potential accident / incident, your liability is your entire net worth (and more).

B4Xt3r
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Re: Anyone with a paid off house drop homeowners insurance

Post by B4Xt3r » Thu Jun 14, 2018 6:04 am

bigdav160 wrote:
Wed Jun 13, 2018 6:54 pm
Call me a fool if you like but I dropped my homeowners insurance, on a similar valued home, 10 years ago when the premiums went to $4500 year. And this was with a 5% deductible.

I don't regret it. It does cause me to be much more diligent on maintenance and upkeep.
^ This is an often overlooked side-effect of insurance, it makes me over consume other goods or services. For example, I recently had hail damage on my vehicle w/o comp. or collision. If I had insurance, of course I would have had them fix it. Given the choice though, I'm living with the dents and instead am closer to FI.

If the cost to rebuild your X is something I wouldn't mind writing a check for, then IMO, I don't usually pay for a service to have someone else on call to write a check for X. X can be anything.

B4Xt3r
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Re: Anyone with a paid off house drop homeowners insurance

Post by B4Xt3r » Thu Jun 14, 2018 6:06 am

AlphaLess wrote:
Wed Jun 13, 2018 11:25 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 are significantly underestimating the risk.

Firstly, home insurance is not just repair insurance for hazards.
It is also insurance for liability.

Secondly, if you have HOME_VALUE * 5 assets, you need to buy additional liability, like an umbrella policy.
In case of a potential accident / incident, your liability is your entire net worth (and more).
Won't the policy spell out the max liability? In that case, we wouldn't need to estimate at all.

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

Post by AlphaLess » Sat Jun 16, 2018 9:29 am

B4Xt3r wrote:
Thu Jun 14, 2018 6:06 am
AlphaLess wrote:
Wed Jun 13, 2018 11:25 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 are significantly underestimating the risk.

Firstly, home insurance is not just repair insurance for hazards.
It is also insurance for liability.

Secondly, if you have HOME_VALUE * 5 assets, you need to buy additional liability, like an umbrella policy.
In case of a potential accident / incident, your liability is your entire net worth (and more).
Won't the policy spell out the max liability? In that case, we wouldn't need to estimate at all.
True. But umbrella insurance limits would typically exceed your assets.

Say, you have $3MM in assets, and the umbrella has $5M liability limit.

When you eliminate the umbrella, you need *another* $5M in assets.

But then, it changes the math. You then need to self-insure as-if you have $8M in assets.
But in that case, you would need a $12M liability policy.

Do you see the problem here?
It becomes an inductive issue.

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

Post by TomatoTomahto » Sat Jun 16, 2018 9:48 am

We bought our house for cash. Chubb assessed the rebuilding cost to be 2x what we bought the house for. Is that larceny? I tend not to think so, since it would be very difficult to rebuild it the way it is: a lot of structural fieldstone (i.e., not just stone facade), lots of intricate and custom molding, 2 outbuildings (garage/workroom and cabana), etc.

We could pay to rebuild it, but I'd rather pay the $9k premium every year, hoping to never file a claim.

Chubb overcharges for insurance, but in my experience, their value becomes evident when you have a claim.

I would not consider dropping homeowners insurance for the house, much less for the liability protection (we also use Chubb for autos and umbrella).

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

Post by chrisjul » Sat Jun 16, 2018 12:19 pm

I live in FL....HELL NO

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

Post by Theoretical » Wed Jun 20, 2018 9:23 am

What you should do is negotiate a very high deductible (5, 10 or even 20K) and self insure for that. That will drop your premiums by a lot. But you absolutely need the insurance especially because you can self insure for liability purposes.

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