Homeowners Insurance

[gsganzer]

Good grief, I looked at my renewal bill today and it's nearly $4K/year with Farmers. Prior to this year, our homeowners was always paid through escrow on our mortgage payment, so we probably didn't pay as much attention to it as we should have. Last year we paid off the mortgage, so we now pay it directly. Although our entire place is valued at about $400- $425K, the actual dwelling is only valued at $200- $225K or so. Based on some online pricing calculators for my zip code, my price seems awfully high, but we might have upped our liability due to horses, workshop etc. Calling the agent this morning to see what's up.


Between the homeowners and property taxes, they equate to almost $1000/mo.

 

[atsah]

That's a pile of money... My homeowners is $750 per year and property taxes are $850 a year.. Houses and property in my area are not valued high, if these two bills were as high as other states there would be no one here to pay them..

 

[Diggin It]

Good grief, I looked at my renewal bill today and it's nearly $4K/year with Farmers.

Although our entire place is valued at about $400- $425K, the actual dwelling is only valued at $200- $225K or so.

Similar to the car thread where people are talking about rates for insuring several late model vehicles valued at $150K or more, the higher the value, the higher the insurance rates. I finally picked up a Homeowner's policy a few months ago; somewhere around $1200/year for $150K coverage which I think is way too high compared to what I paid for this place.

Half million dollar property with high risk activities (horses) is gonna cost ya'.

 

[TractorNH]

Half million dollar property with high risk activities (horses) is gonna cost ya'.

I agree. The insurance company is calculating the risk of a claim. If you have high risk activities others are participating in on your property then YOU are paying for that. One injury and lawsuit (regardless of whether you were negligent or not) and they could easily be forking over a million bucks or more these days to settle a claim.

 

[kenmac]

call an independent agent. They shop several companies. Unlike a captive agent that can only sell one brand.
Would you go shopping at a store that only sold one brand of clothing, food, etc,?
Why shop insurance with a company that can only sell one brand ?

 

[MossRoad]

Good grief, I looked at my renewal bill today and it's nearly $4K/year with Farmers. Prior to this year, our homeowners was always paid through escrow on our mortgage payment, so we probably didn't pay as much attention to it as we should have. Last year we paid off the mortgage, so we now pay it directly. Although our entire place is valued at about $400- $425K, the actual dwelling is only valued at $200- $225K or so. Based on some online pricing calculators for my zip code, my price seems awfully high, but we might have upped our liability due to horses, workshop etc. Calling the agent this morning to see what's up.


Between the homeowners and property taxes, they equate to almost $1000/mo.

Also consider the replacement cost of the dwelling. Many peoples' houses would cost more to rebuild from scratch than they are worth in their market.

Think of it this way....you're paying $4K for insurance on $400K of property.
That's like $1K for $100K of property.
Since you have horses, that doesn't sound all that bad at all.
We pay about $1000 per year for a house that's worth about $90K in our market and it also covers our vacant 20 acres about 9 miles away. There's a $1M umbrella policy included in that $1K per year.

 

[kenmac]

It's funny how insurance companies want to insure you. You buy a place for say 500K that includes property and house.
They want to insure you for 500K.
When you try to argue that you only want to insure the home which is xxx, because they aren't going to replace the property if the home burns down. they always have a funny look on their face like you just hit them with a hammer

 

[BrokenTrack]

If the place is paid off, then why have insurance at all?

I have a farm, and so they wanted me to pay $1400 a month. Since I have (3) homes, that would have been $4200 per year.

SCREW THAT!

I have not had insurance for 10 years now, so I have saved a whopping $42,000. Here, we can buy kit houses for $30,000, so I have saved more than enough on insurance premiums to pay for a replacement home. It will not be the same house that is on any of the places now, but what do I care, I just need a replacement home. (Not to mention, if one burns, I would just move my family to a different house).

But insurance is based upon national trends. I can increase the odds in my favor by installing arc faults, GFCI's, high quality smoke detectors, installing a green switch, and not burning firewood, just to name a few options, to decrease my chances of having a fire. Really it is all about being self-insured, instead of paying premiums and bowing to their wishes.

$42,000 in savings is no small amount of money, but like you, I own my homes outright so I am not required by a finance company to put insurance on them. You have freedom now that your home is paid off; use it!

 

[atsah]

Not having homeowners insurance presents a couple of problems.. 1.) Someone can take you're whole property if they have a good attorney.. 2.) If you actually can put the money away and not use it for some other very important situation (which most people have) at some point.

I burn wood, my setup is maintained yearly by a hearth professional, I wouldn't alter my life to avoid a $700 insurance bill every year..

I dislike insurance company's in general but having insurance gives me piece of mind..

 

[4570Man]

The self insurance idea is great until this happens.

 

[Diggin It]

We've done this thread before. Insurance of any kind if gambling. One side pays the other, either in small amounts or large. Risk assessment is a razor's edge with a swinging mace on one side and a pit of vipers on the other.

 

[caver]

Take more risk with a higher deductible. Get an umbrella policy for if the neighbors kid stubs his toe and the parents see that as winning the lottery. It could be my imagination but it seems to me that now they say it's only 10-20$ more for full coverage. Years ago when a vehicle was down to certain value I would drop full coverage and save a decent amount of money. maybe my memory just sucks. IDK.

 

[PILOON]

Friend insured a commercial building and they insisted $350,000. coverage.
We all agreed that the rundown POS but whatever,
The standing joke was it would hopefully burn, well it did on a Xmas eve,
Now comes the claim, well it took 18 months to finally settle up.
(everyone agreed that it was an electrical short that was the cause, not arson)

They sure like to collect but hate paying out!

One thing to be careful about and its called 'co insured'.
If the building is worth $400k and you are only insured for $200 they can claim U are co insured and you'll only get 1/2 your loss.

 

[4570Man]

Take more risk with a higher deductible. Get an umbrella policy for if the neighbors kid stubs his toe and the parents see that as winning the lottery. It could be my imagination but it seems to me that now they say it's only 10-20$ more for full coverage. Years ago when a vehicle was down to certain value I would drop full coverage and save a decent amount of money. maybe my memory just sucks. IDK.

Paying for a beater vehicle worth 10k or less is very insignificant compared to to the liability cost. I pay about $70 a year more for full coverage.

 

[MossRoad]

I currently pay about $1000 per year for homeowners insurance with replacement cost coverage, contents, plus a $1M umbrella policy. Our house appraises at about $97k. Replacement cost is about $185K. I've spent about $17k on insurance over the past 21 years. We have tens of thousands of dollars in furniture, clothing, appliances, electronics, jewelry, art, antiques, tools, tractor (hello TBN), etc... Anyone that advises people to not buy homeowner's insurance in a blanket statement has not thought about other peoples' situation, and/or doesn't have much to lose, and/or has the means to absorb the loss. Most people do not own multiple dwellings and would have to rent or move in with family or friends while repairs are made. My insurance also covers rent while repairs are made.

While we have enough cash to pay for a house if this one is destroyed, it would consume about 5-6 years of my income.

Then throw in someone suing your for, say, tripping on your steps and hitting their head, your dog nipping their hand when they surprise touched it wrong and causing nerve damage, you're kids' friends riding YOUR kid's bike and wiping out, your gas water heater exploding due to a gas leak and wiping out 4-5 neighbors' houses.... I could go on. I personally know 3 of the 4 above case scenarios and folks that lived in the gas explosion neighborhood in the 4th.

So, say NO to self insurance for most people. In most cases, it is foolish. Very very foolish. The savings are minimal compared to the losses that could occur and its money well spent. One catastrophic lawsuit and your family's future can be altered significantly.

Just my opinion, of course. Run the numbers yourself for your personal situations. Do a spreadsheet. Tornado/hurricane/flood/wildfire, comes through and wipes your house, shop with living quarters, your camper, generator, and your 2nd house on the back 40 and you'll be screwed no matter how much you saved.

Good luck with that!

 

[MossRoad]

Friend insured a commercial building and they insisted $350,000. coverage.
We all agreed that the rundown POS but whatever,
The standing joke was it would hopefully burn, well it did on a Xmas eve,
Now comes the claim, well it took 18 months to finally settle up.
(everyone agreed that it was an electrical short that was the cause, not arson)

They sure like to collect but hate paying out!

One thing to be careful about and its called 'co insured'.
If the building is worth $400k and you are only insured for $200 they can claim U are co insured and you'll only get 1/2 your loss.

i do not understand... you'll only get half your loss because you only paid for 1/2 the coverage. :confused3:

 

[MossRoad]

Take more risk with a higher deductible. Get an umbrella policy for if the neighbors kid stubs his toe and the parents see that as winning the lottery. It could be my imagination but it seems to me that now they say it's only 10-20$ more for full coverage. Years ago when a vehicle was down to certain value I would drop full coverage and save a decent amount of money. maybe my memory just sucks. IDK.

Older vehicles cost more for full coverage because body parts and such are hard to find. my 93 suburban is only worth about $1500. My deductible is $2K. :laughing: I have liability only on that one.

 

[KennyG]

I'm shocked at some of those rates. Do you guys have poor fire department coverage? I pay about $1000/yr for 700K coverage on structures, 500K on contents and $1M liability. And I thought that was fairly high.

 

[Diggin It]

I'm shocked at some of those rates. Do you guys have poor fire department coverage?

Fire department? What's that?

 

[Diggin It]

Just my opinion, of course. Run the numbers yourself for your personal situations. Do a spreadsheet. Tornado/hurricane/flood/wildfire, comes through and wipes your house, shop with living quarters, your camper, generator, and your 2nd house on the back 40 and you'll be screwed no matter how much you saved.

Good luck with that!

I don't have the numbers and I'm not sure they're even publicly available, but I would guess that the vast majority of claims are for less than total loss. I think I went with a $5K deductible though.