Homeowners Insurance

[gsganzer]

I called my broker to discuss my policy. There's a couple of things that drive the cost. Texas is 7th highest in the nation for homeowners insurance. I don't remember the term, but my policy is one that favors the insured (me) with very few exclusions and loopholes that the insurer can claim. I have $500K in liability. I have a 30 x 40 workshop/in-law apartment and it's contents that are covered. We have a fairly high value covering contents, but considering what we have, it's a reasonable value.

One thing to also remember concerning your homes value. The cost to rebuild your house in the event of a disaster is not the same as what you would sell it for or equal to simply building a new house. You typically have a demo and cleanup first, before you can rebuild.

 

[CobyRupert]

We've done this thread before. Insurance of any kind is gambling.

Yep! :thumbsup:

...but unlike a horse track or casino that you can choose not to go to, there's no getting out of the gamble. You either gamble you WILL have an insurance claim and aren't wasting your money; or you gamble you won't have a claim and can put that money to other uses (including self-insure).

 

[fried1765]

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!

But.......if you paid the $42,000 of insurance premiums, with a 2% cash back VISA card, you could have earned $840 (2%) cash back!

 

[atsah]

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.

So if you take out a policy for 200K on a property that's worth 400K, you want 400K if it's destroyed?

I'm no mathematician but that makes no sense..

 

[fried1765]

The self insurance idea is great until this happens. View attachment 616212

If I had been self insured in 1987 I would have lost $247,000 (in 1987 dollars).
Thankfully the insurance company (USAA) ate the $247,000 bill ......not me!

 

[fried1765]

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.

Not sure what you mean by "full coverage".
"Full coverage" can only be on damage to your own vehicle.
Damage to property, and liability, is sold with specific dollar limits, and the premium varies with the dollar coverage you select.

 

[fried1765]

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.

^^^^^^same here......97 Suburban

 

[4570Man]

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.

I’m not sure about that idea at least limited to fairly common models. A new aluminum hood is over $1000 without paint. I could buy a complete 90s vehicle to salvage the sheet metal for that much.

 

[Diggin It]

If I had been self insured in 1987 I would have lost $247,000 (in 1987 dollars).
Thankfully the insurance company (USAA) ate the $247,000 bill ......not me!

I'm having trouble getting even the most basic information out of them. I've also been reading how others are having great difficulty with claims. I'm wondering if they (like so many others) have changed their practices in the last few years to be less consumer oriented.

 

[Diggin It]

I’m not sure about that idea at least limited to fairly common models. A new aluminum hood is over $1000 without paint. I could buy a complete 90s vehicle to salvage the sheet metal for that much.

I keep hearing about how simple 5MPH parking lots bumps can cost thousands of dollars in claims.

 

[BrokenTrack]

But.......if you paid the $42,000 of insurance premiums, with a 2% cash back VISA card, you could have earned $840 (2%) cash back!

That is true!

My wife was a high end banker so we know all the tricks they use to get money out of people. She really struggled because the bank wanted her to push, push, push credit cards, car loans and other financial crap on people. She could look at the financial statements and knew them having more loans WAS NOT IN THEIR BEST INTEREST, and if it did not work well for them, where she could help them and not get them into more fiscal problems, she just would not do it. That obviously went against the will of the bank.

A few times people would call up and say they were closing accounts in an effort to get out of debt, and rather then try and talk them out of closing those accounts, she would say "Good for you". That did not impress the bank any though.

It was kind of goofy having her as a banker, just because we believe in not having debt, and using only cash.

I admit we have taken some risk over the years, but look at where it got us? As a Christian, this is a hard situation to discuss because "pride goeth before a fall", so I do not want to sound boastful, yet you want to show others too, "the borrower is slave to the lender", and good things happen when you do not get into debt. But there are 2000 versus in the bible on money, so spending money wisely is no big secret. Anyone can read what to do...

I do kind of miss her days working as a banker though; just because she dressed pretty sharp for work.

 

[Tomtint]

Our total insurance costs are near 60k a year. This includes all autos, business liability, workers comp, Homeowners, Shop contents, and a basic life insurance policy.... it's ridiculous..

 

[atsah]

it's ridiculous..

It's also MA..

 

[Steppenwolfe]

Our total insurance costs are near 60k a year. This includes all autos, business liability, workers comp, Homeowners, Shop contents, and a basic life insurance policy.... it's ridiculous..

Yep... I hear you. Just payed 2nd 6 month payment for workman's comp... 15k. Liability was another 11k, I believe. That's x 2 for the year... And our clients cry about what it costs today...

 

[bunyip]

We pay $400 for public liabilty of $20m, all based on earning potential and loss for the potential victims.
Not covered with our property insurance.
3 cars at roughly $750 each, home and contents about another $1k.

 

[YanmarFever]

Homeowners insurance? Ha Ha Ha they want $5200 for my house for just a year. Insurance is one of the biggest rackets in America.

Like Broken Track said, stay out of debt, and owe no man anything, you will sleep better too.

 

[Will_C]

Well I hate insurance bills myself-but unless true"self insurance" is in place, people are foolish not to have coverage. True self insurance means the ability to to pay off potential liability claims with out bankrupting yourself, as well replacing vehicles, houses, tractors, or whatever.

I have also seen self employed people locally that have had catastrophic medical bills without any health insurance. I did contribute to fund raising for them, but it kind of bothered me to see them driving 60k plus vehicles while not paying for health insurance.

 

[denmis]

So if you take out a policy for 200K on a property that's worth 400K, you want 400K if it's destroyed?

I'm no mathematician but that makes no sense..

That's not what "co-insurance" means. If you insure a $400k property for $200k, the insurance company will say that you are "self-insuring" half the property. If you have a $300k claim, they will only pay half of the claim (i.e. $150k), notwithstanding you have $200k in coverage. Their theory is that since you are "self-insuring" half the property, you are responsible for half the claim yourself. Usually you need to have coverage of at least about 80% of the value of the property to avoid the co-insurance clause in the policy. Sort of makes sense, since they don't want you to pay a premium on half for the value of the property under the assumption that the odds are you won't have a total loss. Or one can say that it's their way of making you buy more insurance and have a larger premium.

 

[atsah]

That's not what "co-insurance" means. If you insure a $400k property for $200k, the insurance company will say that you are "self-insuring" half the property. If you have a $300k claim, they will only pay half of the claim (i.e. $150k), notwithstanding you have $200k in coverage

Ya, that makes sense..

 

[Bird]

It's very difficult to actually compare insurance policies and rates because of subtle differences. I've had policies with quite a number of different companies in my lifetime, and I HOPE I'm currently paying the best rate. I have both homeowners and auto insurance currently with AAA. And last year I threw them a curve that took them awhile to figure out. As with many people I'm sure, the homeowners and the auto insurance expired, or renewed, at different times. Many, if not all, insurance companies give some discount if you have both kinds of insurance with them. So in order to make it easier to compare, I wanted both of mine to expire/renew at the same time. They finally figured out how to do that.

Now AAA used to have 3 levels of homeowners insurance; currently 2 levels; Deluxe Policy and Premier Policy. Premier being the best coverage and the one we have. I also prefer the annual premium which AAA uses instead of the 6 month policies. Zillow.com currently shows the value of our place to be $209,444. The tax appraisal is $206,682.

So our current insurance coverage is:

Dwelling $197,000
Other Structures $19,700
Loss of Use $39,400
Unscheduled Personal Property $118,200
Personal Property Off Premises $11,820
Deductible (1%) $1,970
Personal Liability $200,000
Medical Payments to Others $5,000

Total Net Annual Premium $1,797