Creative homeowner's insurance (Golf: home owners insurance, house, buy)

[SamEdelcup]

With all the hand wringing about homeowner's insurance rates in Florida, would the following be feasible?: self insurance.

Could a disciplined homeowner put the $400 per month that he would pay to the insurance company...could he deposit that $400 each month into his own insurance account? That amount could be increased each month as the insurance companies raise their rates over time. Over a period of 5 years, this insurance fund could be worth $27-30K. The average claim against a homeowner policy will ordinarily not exceed this amount, if, indeed, any claim is made at all during the time you are insured by an insurance company. (Granted, I said "average claim")

It's a bit of a crap shoot, but depending on the age and location of your home, this might be a feasible alternative to the insurance companies.

[Golfer60504]

What about the liability aspect of insurance though, that is where you could never have enough if you were sued if someone were injured on your property.

[motordavid]

Good question...we have seriously considered it on both our NC Mtn home and our SW FL seasonal house. Both are mort free, which helps slightly in our internal debate.

Golfer brings up the critical point in the situ, imo: the liability issue. We have a $2Mill umbrella on our western NC Mtn house, along with the usual HO insurance. Our ins company, and our local NC agent tell us that for the umbrella portion to 'carry over' to our FL house, we must have X amount of insurance on our FL house, even though that FL house has 'whittled down' HO insurance, and through a different agent and ins underwriting company. Didn't intend for that paragraph to sound so complex...

Thus, in this sue me/sue you climate, we feel the umbrella portion, (which we are told we can't cop the umbrella as a stand alone item), so we continue on with both.

But, it is a reasonable question and debate...unlike car ins., one can go 'self-insured' on their house(s), (if mort free), but the liability issue looms like the debbil in the closet, if something 'happens'.
BR, mD

[bbronston]

If you don't have a mortgage, there's nothing that says you have to have insurance. If you want to run the risk of losing everything, it's a free country (so far) and you are free to do so. Of course, the government can now penalize you for not having medical insurance so it may be only a matter of time before you will penalized for not having liability insurance and property insurance.

[FLSnowbirds]

We had the same thought as you about 12 years ago. You have to have x amount of underlying insurance to qualify for a personal umbrella.

The next best thing for us to do with regard to self insurance was to raise our deductible on our home owners insurance to $5,000 dollars. Our premium went down significantly.

If you are serious , ask your agent for quotes with high deductibles ($5,000, $10,000 etc etc) and see if one of them would be feasible. Good Luck

[Californianz]

Notwithstanding liability, you're gambling with very good odds against having a major or total loss. Many might not even tend to turn in a claim if it's not too high, just so the rates don't go up!

In 1994 we had the Northridge Earthquake and while the damage wasn't horrible - it still ended up being $70,000.
Another house we had a water leak accident and it required replacing wood flooring that cost thousands.
Another house we had a HVAC vent failure under a raised foundation that caused mold to be remediated - $4,0000.

Stuff happens. I'm not sure I personally would bet against major or total loss in hurricane country. It might be a safer bet in Canada or something however. But then that's how insurance companies get rich - playing the odds against consumer's fears. If they can write 1 million policies that average $4000/year - that's 4 BILLION dollars of income to pay claims (with deductibles off of each one) and pocket the rest. Odds are only a very small percentage of their policies are going to have claims in the grand scale of things.

The numbers are purely examples, some companies are much smaller and some may be bigger...

[d4g4m]

'Wind' deductible is based on the cost to rebuild a totally destroyed. If the insurance company says it would cost $170,000 and you have the default 2%, the deductible is $3400 So if a hurricane blows the shingles off the roof, the insurance company will pay about half the cost to re-shingle the roof. But the annual premium for the house is $3000
Sinkhole deductible is 10% [$17,000]

[Cardiff by the Sea]

Originally Posted by d4g4m

'Wind' deductible is based on the cost to rebuild a totally destroyed. If the insurance company says it would cost $170,000 and you have the default 2%, the deductible is $3400 So if a hurricane blows the shingles off the roof, the insurance company will pay about half the cost to re-shingle the roof. But the annual premium for the house is $3000
Sinkhole deductible is 10% [$17,000]

Yikes!

How do the wind mitigation studies factor in?

[catsupbottle]

Why not just figure out the year in which you are going to have the big loss, buy insurance during that year, and go without insurance the other years?

[TamRE]

Homeowner insurance


Insurance rates vary by age of home, size of home,
conditions of home, and location of home. Insurance is more expensive if you live
near any type of water – pond, lake, river, Gulf. Insurance is more expensive if
home was not built to current hurricane standards. You can get discounts the home
qualifies for by having a wind mitigation inspection done at the same time as your
home inspection. Discounts are available for building features that reduce damage
during high wind events. Overall discounts include things such as age of home, style
of roof, how close the home is to a body of water, how close to a fire hydrant, how
the roof is tied down, if the home has hurricane shutters or impact resistant
windows, frame or block home, etc. If the home is in a flood zone, the insurance
company will require a flood elevation certificate. That can be obtained by paying a
survey company to prepare it. To check Flood Zones go to
type in the address of the property. It will give you the flood zone, rates, and
insurance companies.