Anybody thinks it is a waste of time to have Property Insurance?
Thursday, August 19th, 2010 at
9:34 am
Anthony F asked:
I live in a hurricane zone and apart from that I have always been afraid of fire or earthquakes. The cost is almost prohibitive, but my house is now insured, in time for the hurricane season and I feel so much more relieved.
I live in a hurricane zone and apart from that I have always been afraid of fire or earthquakes. The cost is almost prohibitive, but my house is now insured, in time for the hurricane season and I feel so much more relieved.
My friend says one of the dictums of insurance is that if you can replace it yourself then you shouldn’t insure; if you can’t then you should.
What do you think?
Tagged with: Earthquakes • Hurricane Zone • Property Insurance
Filed under: Homeowners Insurance
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you need the insurance, good move
No its not a waste at all.. if your house burns down, floods, theft you will have help replacing what you’ve lost.. without it who knows if something will ever happen but your safe if it does..
If you can replace or repair it if it gets damaged, then self insurance may make sense, but liability/casualty is still an issue – what if someone gets hurt on your property? The amount of damages can be any amount. I would just get a high deductible – that would be safer.
Most mortgage company’s will require insurance, as they have to protect their interest. Yes, if you own your house outright, I guess you can self-insure if you have enough money to replace it if something happens. But, I would play it safe and get the insurance
Self insuring is tricky business. What if you were sued by another home owner on an issue related to negligence? Can you afford it? What about contents, fences and out buildings…can you afford to replace those too? In a hurricane area, you also need flood (FEMA) insurance to cover storm surges and rising water. Your standard HO policy will not cover flood damage that is not due to a storm created opening in the dwelling..such as one made by wind or flying debris. Flood insurance is not the greatest, it will not cover anything but the dwelling (no contents) and if your damage is due to wind and flood (surge) your HO and federal flood will duke it out to see who pays what…but you can’t go without it! You can purchase flood coverage from the same agent who sold you the wind coverage. (Make sure you have wind coverage in addition to fire, etc.., you’ll need it.) Trust me, I worked 180 hurricane claims in 2004 and 2005 and saw so much heartbreak because people didn’t have the proper type of coverage or enough of it. Protect yourself.
I live in a hurricane zone (Houston) and a 100 year flood plain. There’s NO WAY I’d skip my homeowners insurance. HOWEVER, we DO skip the flood insurance.
It’s about risk vs. cost. Sure, If I had a net worth of $10,000,000, I’d probably skip the homeowners policy (if I was living in the same house, LOL, if I had a $5,000,000 home, I’d still carry it).
MOST people CANNOT afford to replace their homes. What you CAN do, is afford the first $5,000 of claim – which means, take the high deductible, save on the premium.
MOST people can’t afford the cars they drive, let alone be able to replace them with another car.
Absolutely, if you can afford to “self insure”, it makes sense. But you need to be ACTIVELY risk-managing. And really wealthy people, do NOT try to self-insure on LIABILITY issues, only property issues.
The biggest benefit of maintain liability insurance on your property is that it provides for a legal defense in the case you are sued. Legal bills can get very expensive, even if you did nothing wrong. Going without liability insurance is a really bad decision.
Since you are considering going without property coverage, I take it you do not have a mortgage on the property. If you feel relieved to have the property insurance, then it might just be worth the peace of mind you are getting. Think what you would do if the whole place burnt down. Is this a loss you can handle? The best option might be to select a very high deductible.