What's the highest amount you would self-insure for?

[figner]

I've heard folks say to self insure as much as possible, because in theory your losses should average out over time and cost less than paying insurance premiums over the same period. In theory, I could cover the loss of a brand new car (about $20k for me) with my emergency fund, but I generally don't drop collision/comprehensive coverage until the car is over 5 years old. Peace of mind thing, I guess.

What's the highest dollar amount you're willing to self insure? If it depends on the item being insured, please elaborate!

 

[Culture]

That all depends on the risk, doesn't it? While I answered the poll based on commonly available insurances (car and house), I self insure against much larger losses in other areas. For example, I do not carry flood insurance. Therefore, I am self insured to the value of my house in this area ($180k).

I only carry $500K insurance on my wife, but the NPV of her lifetime income stream is much larger than $500k, probably on the order of $1.5 to $2M. So I effectively self insure here.

 

[figner]

That all depends on the risk, doesn't it? While I answered the poll based on commonly available insurances (car and house), I self insure against much larger losses in other areas. For example, I do not carry flood insurance. Therefore, I am self insured to the value of my house in this area ($180k).

True, I didn't think of things like life/flood insurance, so I guess I meant the more commonly used types of insurance (as you said, for things like house, car, valuables). But I do find it interesting to hear about the other areas as well.

 

[OAG]

Carried $8K deductible on Home Insurance for 19 years in Florida. Never a loss or claim. Jacksonville Area -- Last hit by hurricane was sometime in the 60's -- think it was Dora.

 

[Moemg]

I have a $ 27,000 deductible on my homeowner's insurance . The real value of my house is in the land .I have two and a half lots on Sarasota Bay so even if a hurricane totaled my house the land would still be there so I take the risk.

 

[farmerEd]

I answered "more than 64K", but it does depend on the risk.

I'd get a 50K deductible or more on my house if one was offered - but its not. I do self-insure my farm tractors and other equipment (closer to 100K), but the risk is minimal (theft is probably the biggest risk, but not very likely). Fire is not much of a risk since its all stored outside in a field away from big trees (ever wonder why those dumb farmers leave all that expensive equipment sitting out in the rain?) I actually had farm equipment policy, but at $400/year I figured I didn't really need it.

 

[farmerEd]

I have a $ 27,000 deductible on my homeowner's insurance . The real value of my house is in the land .I have two and a half lots on Sarasota Bay so even if a hurricane totaled my house the land would still be there so I take the risk.

What company offers that high a deductible? Mine only allows upto $1000...I'd love to get a higher one, and save on the premiums. never a single claim...

 

[Rich_by_the_Bay]

The real value of my house is in the land .I have two and a half lots on Sarasota Bay so even if a hurricane totaled my house the land would still be there so I take the risk.

Yikes - that makes you, by my careful calculation, a zillionaire .

How and when did you stumble on that puppy? Good call, whenever it was.

 

[dmpi]

For cars, you can look at your own driving record to predict if you need insurance. For us, we driven for 25+ years with no accidents so we self-insure our cars. However we do buy libility insurance... just in case.

 

[clifp]

I dropped my collision insurance on my car after two years. (Of course I immediately had accident when parking brake didn't hold and my car rolled back and hit another in the parking lot). I'd drop hurricane insurance in NY minute if I didn't have a mortgage requirement. Fundamentally I believe in health insurance and that is it. Insurance companies like Berkshire Hathaway make tons of money no reason to have mine.

 

[Khan]

I have good med insurance as a Fed retiree ($2k deductible).

Car is liability only, but more than required by state (what's the worth of an 1989 econobox?).

House is for replacement with $2k deductible.

No life insurance (except for 2 minimal freebies), don't need flood insurance.

 

[Nords]

Self-insured for long-term care...

 

[Moemg]

Yikes - that makes you, by my careful calculation, a zillionaire .

How and when did you stumble on that puppy? Good call, whenever it was.

No zillionaire ,just made a good investment .I bought the house from a failed singer .She thought she was the new Reba but didn"t make it . They had overextended and needed to sell the house .Which had a black recording studio and several unique features . I made a real low ball cash offer and they took it .Just lucky !

 

[aenlighten]

Earthquake insurance is so poor it is not worth having so I technically self-insure for that which could be $200k if leveled but the risk of that is quite small.

 

[W2R]

Self-insured for long-term care...

Me, too.

I truly loathe and despise the entire insurance industry. Sorry if that offends anybody. It's hard to feel like I'm "in good hands" any more, given the insurance horrors that we have seen others go through consistently down here after Katrina. I won't ever complain, and instead I am in the process of gradually shifting towards self-insuring.

I can't afford to self-insure to any great extent yet, though I have $1000 deductible on my homeowners' and flood insurance, around $200 deductible on health insurance, and I have no dental insurance. However, I am building wealth and I do plan to self-insure for long term care insurance later in life. So, I put down >$64K.

 

[Moemg]

What company offers that high a deductible? Mine only allows upto $1000...I'd love to get a higher one, and save on the premiums. never a single claim...

Citizens .The Florida insurance of last resort .

 

[MooreBonds]

Currently have $5k deductible on health insurance (healthy 30-year old).

I'm leaning towards self-insuring LTC...but, might rethink that if I get married some day and get a combined quote w/ my wife (supposedly, quotes are cheaper if you're married, since married people sometimes utilize LTC to a lesser extent than single people). So, since I'm probably going to self-insure LTC, I picked the $64k

 

[loosechickens]

we've always self insured (except me since this year, now on Medicare) to an extent on medical insurance, always carrying a high, (usually $5,000 per person per year, sometimes $10,000) deductible. We always self insure for collision on our cars, and never obtained collision or comprehensive on our little truck, although we carry very high limit liability insurance to protect the brokerage account.

We did get collision, etc. on our motorhome, as a potential for $200,000+ loss was uncomfortable to us, but now that we've had it for nine years, we are considering dropping that coverage, although we probably won't because it isn't really expensive on motorhomes, and the loss potential is still nearly $100,000, more than is comfortable.

Pretty much, if the loss is down in the $20,000 or less potential, and unless risk looks really, really high, we usually self insure.

And over the past thirty years we've been together, I guess we've been lucky as well, because it never backfired on us, although we were prepared if it did.

I think in many cases, lots of insurance is sold to us on a fear based basis, just like the Iraq war. And sometimes our fears are irrational, and even when they aren't, usually can be dealt with if they happen. Life itself is a risk. And none of us are getting out of it alive.

LooseChickens

 

[free4now]

Agreed that it depends on the particular risk we're talking about. I self insure against losing my entire portfolio to a war or political seizure, as does most everyone.

The important question is how often am I likely to face the risk. With healthcare I have a $3500 deductible, and wouldn't want to go too much higher, because of the possibility that I could face a chronic condition that requires care on an ongoing basis.

With car insurance I have considered skipping the collision coverage and self insuring for the $20k or so value of the car, but I decided not to do so because it's a realistic possibility that I could total several cars in a relatively short timeframe, putting me way above 4% withdrawls. Even though up to now I've only caused a few thousand dollars worth of collision damage in my lifetime.

But I don't mind skipping FDIC savings deposit insurance by keeping my HSA funds at Patelco credit union, because the likelihood of them going under and not getting bailed out is remote and infrequent.

 

[chinaco]

I'm leaning towards self-insuring LTC...

Good Luck! Insurance is best applied for catastrophic situations. In our current world... LTC is such a situation. It is an unlikely event while young, but the need can arise. As you age, the probability increases dramatically. You are likely to live longer, but that does not mean parts of you will not break-down.

Unless you are truely wealthy, you would be advised to get LTC insurance. The event will devistate your assets (or the assets of the surviving spouse).

Consider LTC like home insurance. The event of a fire is unlikely, but would you go without it to protect your home (Asset). LTC is protection against the loss of your portfolio.

 

[teejayevans]

Unless you are truely wealthy, you would be advised to get LTC insurance. The event will devistate your assets (or the assets of the surviving spouse).
Consider LTC like home insurance. The event of a fire is unlikely, but would you go without it to protect your home (Asset). LTC is protection against the loss of your portfolio.

Have you priced LTC insurance lately?? Might be affordable if you are
50, but when you're 75?
TJ

 

[SecondCor521]

I'm with MooreBonds on this one. I also plan to self-insure for LTC. I think LTC insurance specifically, and most insurance generally, is a racket.

I realize I'm taking a calculated risk.

2Cor521

 

[brewer12345]

I also plan to self-insure for LTC. I think LTC insurance specifically, and most insurance generally, is a racket.

I guess would split it down t he middle as half a racket and half a necessary evil. But the consistent 15 to 20% ROE posted year after year by most insurers suggests that the racket part dominates...

 

[SecondCor521]

I guess would split it down t he middle as half a racket and half a necessary evil. But the consistent 15 to 20% ROE posted year after year by most insurers suggests that the racket part dominates...

Yeah, that's part of the issue. The other part is that insurance companies make that ROE after their 20-30% overhead. And then there's just the hassle factor of dealing with the insurance company when you're getting the policy, paying for the policy, making the claim on the policy, etc. I'm against euthanasia but in this case I'd rather go out like Hillary Swank in Million Dollar Baby than deal with the LTC hassle.

2Cor521

 

[brewer12345]

LTC is a particular problem because it isn't a mature product. That means pricing is questionable, relatively few companies offer it, it isn't clear whether your premiums will get jacked to the sky in the future, and Gawd only knows if the companies writing it will still be around in 20 years when you might need them.

No thanks.