No Homeowners Insurance? (renters, mortgage, cheap house)

[Macy80]

Hi! My husband and I recently paid off our mortgage which was a big dream of his. Now he wants to drop our homeowners' insurance and I'm completely uneasy about it!

We have enough savings to put a down payment on a smaller house if something major would happen. However, we have 2 very young children and that would be a major setback to our savings, college fund, and retirement.

He doesn't want to drop the insurance because we can't afford it. We've never filed a claim (which is actually a good thing!) so he thinks insurance is just wasting money. I'm worried about someone getting injured on our property and us not being covered? We order a lot of things online - are delivery people covered by workers' comp or homeowners'? Also, my daughter is having a birthday party in a few weeks and we're inviting several preschoolers- things might get a little rambunctious!

I can't find anything online to support his opinion. Thoughts on dropping homeowners insurance?

Thanks in advance!

[h Steve]

Our home has been paid off for several years and there is no way I would even consider canceling our insurance. IMO the idea is ludicrous.

[SalamanderSmile]

Never. Pennywise and pound foolish. I even get renters insurance when I rent.

[Sarah Perry]

The idea of dropping insurance is completely insane. You should, however, put in a call to your insurance company and make certain you're not paying for more coverage than you really want or need. Our policy has some kind of "automatic" escalation provision, and after about 10 years the replacement value on the house and contents had grown to much more than the actual worth. That's money we wouldn't have recouped in the event of a claim. The phone call took about 20 minutes or a half hour, while we answered a bunch of questions. It resulted in a couple hundred dollars savings in the next premium.

[mrstop]

You have to ask yourself what you would do if your house burnt down tomorrow. Are you in a position to self-insure (i.e. rebuild at your own expense)? Unless it is an uber-cheap house and/or you have a high liquid net worth, I wouldn't even think about self-insuring a home. Home insurance around here is pretty reasonable.

My reco is to raise your deductible to an amount you are comfortable with and shop around a bit. However, note that cheaper isn't always the best. You want the insurance company to be around and support you should disaster strike. I have been very happy with Amica. I don't like to use insurance. But when I have they have taken care of things without any hesitation.

[Wilson513]

Homeowners' insurance covers several things.

The value of the home or the cost to rebuild.
The cost of demolition if burned.
The cost of repairs,
The value of contents from theft or casualty.
Liability coverage to protect people who may be injured by the homeowner or on the premises.
Medical payments.

And all of this comes for a relatively tiny premium.

Anyone without homeowners' insurance is a complete moron and scoflaw. See a divorce lawyer.

[Macy80]

Thanks everyone!

[tel0004]

Check to see if you could raise your deductible to lower your rate. You could save some money, and take on some risj, but still be covered if your house burns down or any major loss.