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Old 03-05-2010, 09:20 PM
 
1,139 posts, read 3,009,834 times
Reputation: 793

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I dropped 'sinkhole' coverage last year and it dropped my Home Owner's Insurance premium from $1400 to $800 a year.

Now, that I'll be paying off the mortgage soon - Is it worth it to continue to pay for home owner's insurance?

I know why the insurance exists but there are tons of exclusions involved that I would rather have the insurance company tell me what's included under what conditions than the other way around...

Link: Insurers Drop Drywall Victims - WSJ.com

1. If StateFarm is not renewing policies, is it because they can't make more money or they don't want the risk from likely claims they may face?

2. How did people live without home owner's insurance 20 or 30 years ago?

I did a little math.
If you invest the $1000 every year in an investment vehicle that theoretically returns 9% then at the end of 30 years, you will have ~150K

Link: Compound Interest Calculator

3. Have people dropping their coverage and went bare? If so, please post your pros and cons before you decided to go down this path.
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Old 03-05-2010, 09:42 PM
 
Location: Myrtle Beach
3,380 posts, read 8,178,722 times
Reputation: 2930
I used to sell homeowner's insurance. I no longer am involved in the selling of insurance but I will give you my opinion. You need to have homeowner's insurance unless you have enough money in the bank to rebuild your home in the event of a loss and are willing to take that risk. The easiest way to way to control the cost of your insurance is to increase the deductible to the maximum amount you are capable of paying/willing to pay. Don't drop your insurance just because your home is paid off. Imagine if something should happen to it, all that money and effort you put into that home would be for nothing and you have to start from square one. Call your agent, ask what your options are for deductibles and get a quote from there. You will be surprised how much it can lower your rate. The same applies to auto insurance as well. Also, please tell me where you can put your money right now and get a 9% return!
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Old 03-05-2010, 09:53 PM
 
1,024 posts, read 3,083,745 times
Reputation: 836
Its called insurance for a reason... that is one item I'd never cut out of the monthly bills. In Florida anything can happen, especially during the rain season/hurricane season. Sinkholes yes I could see but to completely devoid yourself of any recall would be unwise imo.
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Old 03-06-2010, 05:03 AM
 
26,746 posts, read 41,075,240 times
Reputation: 14893
I have a couple of homes, all with no mortgage on them, but that doesn't make me a rich person, maybe a person who saved more money.

I have HO ins. on all my homes and wouldn't go to bed and sleep well if I hadn't.

By the way this week I noticed we had a home close by that has sinkhole issues, and if you walk by the home you can't see anything. On the public records it is stating $43 K in damages. We all thought the Home owner had walked away just as he spoke about a year ago...maybe he did, but the sinkhole has been proven to be there, and that is getting awful close.
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Old 03-06-2010, 08:58 AM
 
15,755 posts, read 32,814,853 times
Reputation: 19722
there was a sad story in the paper here a few months ago about a struggling single mom, who had just paid off her very modest home. She decided to drop insurance because she was juggling bills as it was, and literally a few months after dropping it, faulty wiring caused the house to burn down - a total loss.

Never go without at least some insurance.
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Old 03-06-2010, 09:52 AM
 
5,453 posts, read 8,118,961 times
Reputation: 2141
I have to agree, this is one thing you really don't want to be without...what if you get robbed? Plus indeed after paying so much money for a home it would be silly not to have it insured....
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Old 03-06-2010, 11:43 AM
 
Location: Tampa, FL
162 posts, read 604,832 times
Reputation: 96
Penny wise, pound foolish I’d say. Homeowners Insurance is something you don't want to be without. I'd also like to see an investment paying an average 9% return over the next 30 years. Even so, in the interim, your house could burn down. 150K probably wouldn't be sufficient to cover most of my contents let alone rebuild my home. Things can happen to your home besides simply burning down - or to someone visiting it!

Usually when people have the house paid off a lot of agents recommend upping the deductible to 10K if you can afford it. It drops the price even lower. If you are only paying $800, I’d say that’s a mere drop in the bucket. I paid that when I lived up north and had a 4500 sq. ft home. I pay nearly 4 times that here with flood and sinkhole coverage for a much smaller home.
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Old 03-06-2010, 01:28 PM
 
Location: Tampa, FL
27,798 posts, read 27,684,108 times
Reputation: 14611
I pay $250 in flood insurance for my own piece of mind but everyone tells me that I'm wasting my money since I'm not in a flood zone. I do have a huge manmade lake across the street and I'm not sure what kind of problems that can pose.
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Old 03-06-2010, 04:09 PM
 
1,139 posts, read 3,009,834 times
Reputation: 793
Thanks everyone. Good points all over.

The 9% I used was what's being thrown around by investors/brokers about the stock market returns.

I understand having insurance gives you peace of mind and you would thank yourself for having it when disaster strikes however, I would like to keep the premiums low if am not EVER going to make a claim.

I have had auto insurance for about 15 yrs now and have NEVER made a claim.

Currently, I have a 5% hurricane deductible which lowered the premium.
However, I would have to pony up $15K(on a 300,000 home) first before the insurance company would pay anything so am just looking to keep the premiums lower.
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Old 03-08-2010, 09:15 AM
 
1,106 posts, read 2,033,177 times
Reputation: 954
How much stuff would you have to have stolen before filing a claim? Seriously, they would have to back up a truck and clear out everything before you would hit a 5% deductible.
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