Homeowners Insurance

[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.