Suzy Orman Ditches HO Insurance (don't do this at home)

This will expose my peon status, but why would 2100 sq ft be sad? I googled and she is 73 yrs old. I'm only 68 yrs old and with less than 1000 sq ft, and already if I want something from the kitchen at night I feel reluctant to "walk all the way to the kitchen". I wouldn't be surprised if by 73 yrs I put a coffee pot in my bedroom.
Do it, I have a small dorm room size fridge in my bedroom full of bottled water and sometimes a few sodas. I'm too lazy to walk downstairs in the middle of the night to get a drink. I bought it on a Black Friday deal probably more than 10 years ago when I was still working for $69 and it works for me and it's no one's business but mine.
 

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I found her building (easily googled) and yeah...not the kind of place you'd expect a super multi-millionaire to have. Looks like she bought it for just under a mil in 2014. She described it as "totally normal", and for the Hillsboro/Pompano Beach area, she's right.
 
This thread bothers me a bit - none of us should be telling others about how they should or should not be spending their money, assuming they are adults capable of their own thinking (i.e. no dimensia etc.)
Rest easy.

Suzy has made a nice career telling other people how to spend their money and IMO she's past her sell date. Who asked her in the first place?!

My comments were merely my personal bias on wealth and spending and, like most of my posts should not be taken too seriously.

Just some childhood trauma surfacing from time to time on the subject!
 
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There are certainly more details that are left out, which the replies here have picked up on.

Considering her audience, it's not a good message to give to them, that it is ok for you to self-insure. I really do not like the term "self-insure" at all. The correct phrase is I AM UNINSURED.
I suppose that's the correct phrase to you. To me it's self-insure. It doesn't really matter as you can call what you wish. We choose to forego insurance for a lot of things in life. I prefer insuring big things and being uninsured as you say for countless small things... and I consider that I am taking on that risk and therefore comfortable calling it self-insurance... but, again, it doesn't matter. Call it as you wish. :)


So let’s say her 2 million dollar condo floods next year and needs 1 million in repairs. Who’s the idiot now?
It depends on how you look at it. On average we are the idiots for paying for insurance because, on average, we will spend more on insurance than the insurer will pay out. By definition that's how it works. I personally would at least want a liability policy but she can easily rebuild if she gets a million in repairs so no biggie... and, over the course of her lifetime she'll likely come out ahead financially!

Why on earth would anyone care about, let alone criticize, the size of Ms. Orman's condo or whether she self insures:confused:?

From our perspective it is entirely her own business.
I think the reason it's a topic is because she is a public figure who gives financial advice. Most people can not afford take on that risk and shouldn't self-insure. Thus, it's probably not smart for her to be talking like that as some of her followers will undoubtedly follow suit.
 
Condos are usually covered under a master policy the owners are paying for via monthly dues.

So condo insurance coverage is normally just liability plus contents.

Someone like Orman would already have liability coverage in the high 7, if not 8, figures...
 
ICAM. I've always thought it ridiculous that insurance companies won't let you choose the exact amount or percentage of the house (or property, etc.) that you want to be reimbursed for if a disaster occurred. Why shouldn't I be able to specify that I only want to pay a premium that covers 80% of the costs of a full rebuild? Or even totally forego that part of the premium that covers a full rebuild and only pay for covering the contents inside the house, if I wanted to do it that way?
I think you can...

Way back when the insurance company said it would cost $400K to rebuild my house... I could buy a new one in the neighborhood for $200K... I said I wanted to insure mine for $200K... I was told that I would only be covered for 50% of any damage...

To be clear... that means if I had a $20K claim they would only pay $10K as I was 50% covered... they were not covering the first $200K...

I paid the full premium as I could not cover a big loss at the time...
 
I think you can...

Way back when the insurance company said it would cost $400K to rebuild my house... I could buy a new one in the neighborhood for $200K... I said I wanted to insure mine for $200K... I was told that I would only be covered for 50% of any damage...

To be clear... that means if I had a $20K claim they would only pay $10K as I was 50% covered... they were not covering the first $200K...

I paid the full premium as I could not cover a big loss at the time...
Last year I tried, and our insurance company said "We cannot do that". They required we insure for the full amount they determined. I told them the same thing, that their valuation was on another planet relative to what comparables in the neighborhood were selling for. I asked them to send someone out to redo their inspection/appraisal. They had me use the app they're now using - took some pictures it wanted from different angles, a few days later they gave me the new appraisal, it was a smidge higher than what they had.

After reviewing everything and tweaking a few things, they lowered our premium by maybe $90. This year they raised the valuation again, and the premium by $700. I've given up.
 
Considering her audience, it's not a good message to give to them, that it is ok for you to self-insure. I really do not like the term "self-insure" at all. The correct phrase is I AM UNINSURED.
No, she truly is self-insured. Big difference. My parents bought a modest house in North Myrtle Beach in 1988 and paid cash for it. It was about a mile from the beach, so definitely at risk. In their last years they dropped windstorm insurance. They figured the land was worth more than the house and they had the resources to go elsewhere if it blew away. Dad sold it for a nice price, fully intact, a year after Mom died.

Similarly, I am self-insured for long-term care. Uninsured means, "I'll save the premiums, hope nothing happens and if I do I'll cry for the government to bail me out". Self-insured is genuinely accepting the risk and making sure you have the funds for it.
 
Condos are usually covered under a master policy the owners are paying for via monthly dues.

So condo insurance coverage is normally just liability plus contents.

Someone like Orman would already have liability coverage in the high 7, if not 8, figures...
The exterior is. If you want kitchens and doors and stuff you need your own policy. I insure about $150sf to rebuild my interior to my liking, but it only costs me $800 per year.
 
Most here probably do not have the auto repair insurance that is pushed hard on TV. Such insurance will never pay out as much as it collects in premiums because those premiums have to also pay for the organization that offers the policies, their TV ads, etc.
 
At least in the business sense, self insured means the expected losses are equivalent to the insurance premiums. This is common with fleets of autos, buildings, employee health insurance.

No insurance means the risk of loss is not offset in any way other than saving the premium.

Miz Orman (along with Charlie Munger et. al.) surely has some insurance to cover liability and other risks. In their cases, no homeowners insurance does not mean uninsured, it means the house or condo unit is not insured for damage. If they have multiple properties and insure none of them for physical damage, it’s more like a something in between self insured and not insured.
 
At least in the business sense, self insured means the expected losses are equivalent to the insurance premiums. This is common with fleets of autos, buildings, employee health insurance.

No insurance means the risk of loss is not offset in any way other than saving the premium.

Miz Orman (along with Charlie Munger et. al.) surely has some insurance to cover liability and other risks. In their cases, no homeowners insurance does not mean uninsured, it means the house or condo unit is not insured for damage. If they have multiple properties and insure none of them for physical damage, it’s more like a something in between self insured and not insured.

A lot of the "big boys", i.e. very wealthy, corporations, etc. have a "self-insured retention" which amount may vary. Unlike the wee folk who are frequently required to have a base layer of coverage even to get excess/ umbrella, they frequently do have (layers upon layers) of excess insurance which in turn has re-insurance. Sometimes the excess requires that the insured/ client hire a third party administrator to handle claims within the SIR.
 
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In our area, homeowner's went up but the worst is "Louisiana Fair" which is the state sponsored wind'n'hail (hurricane) insurance. It has gone up tremendously. I thought of not paying it but had the money so I did anyway. Then Frank decided not to pay his and I can hardly blame him! Next year I may drop mine, too. Flood insurance is high too, but not as bad as Louisiana Fair.

Meanwhile I am hoping that something may be done about the insurance situation here, but I am not holding my breath.
 
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ICAM. I've always thought it ridiculous that insurance companies won't let you choose the exact amount or percentage of the house (or property, etc.) that you want to be reimbursed for if a disaster occurred. Why shouldn't I be able to specify that I only want to pay a premium that covers 80% of the costs of a full rebuild? Or even totally forego that part of the premium that covers a full rebuild and only pay for covering the contents inside the house, if I wanted to do it that way?
I think the easy answer to your question is that the insurance companies are good at the numbers. They've figured them six ways from Sunday and KNOW pretty well what they must charge to make the amount they want to make in a year.

What occasionally throws them is a bad hurricane year (or an entire town burning to the ground like Lahaina Maui.) BUT, in general, when they are afraid they won't make enough, they brow beat the regulators into letting them charge more - a lot more (or else threaten to pull out of the area.)

Kind of a racket, but I guess we could always invest in their stock so YMMV.
 
IIRC (which is no guarantee) last year my insurance carrier did not raise the premium for hurricanes, but they, sua sponte, raised the deductible and redefined how they would qualify what would be considered to be as a result of hurricane. (I don't have the policy handy to check the precise language.)
 
If I got a $20,000 home insurance quote, I would consider self insuring, except for one thing and that is liability insurance. I have a friend with a home with only a few 10-s of thousands of more value than mine and he got a quote of over $20k in Fl. Luckily he was able to get the State backed insurance for a little over $3k. But every year the try to get him of the policy. He did look into self insuring and getting a separate liability policy, I think he did find something, but went with the the state backed ins.
 
The exterior is. If you want kitchens and doors and stuff you need your own policy. I insure about $150sf to rebuild my interior to my liking, but it only costs me $800 per year.
Most condo policies cover contents and unit owner improvements. The quote she got is because of the location and risk of loss. She didn't say how much she the interior contents and improvements were worth to justify a $28K quote, but I expect the insurer wants the $$$$$ expecting a total loss that their reinsurance carrier wouldn't cover.
 
A lot of the "big boys", i.e. very wealthy, corporations, etc. have a "self-insured retention" which amount may vary. Unlike the wee folk who are frequently required to have a base layer of coverage even to get excess/ umbrella, they frequently do have (layers upon layers) of excess insurance which in turn has re-insurance. Sometimes the excess requires that the insured/ client hire a third party administrator to handle claims within the SIR.
Even companies with a self-insured retention are required by financial regulations to have adequate reserves for anticipated claims within that retention. You can't just cash-flow them as they come in. Estimating those liabilities for clients was part of my last position.
 
I self-insure collision on our cars and I also self-insure my life-insurance. All that means is I don't need compensation from a policy if a car needs repairs or if I die. That is what self-insurance means to me. I usually only have liability insurance which I prefer not to self-insure so much.
 
I self-insure collision on our cars and I also self-insure my life-insurance. All that means is I don't need compensation from a policy if a car needs repairs or if I die. That is what self-insurance means to me. I usually only have liability insurance which I prefer not to self-insure so much.
This is what one of my sisters did when her kids were teenagers.... bought old cheap cars that were throw away if wrecked and only bought liability..

DW did not like that... wanted a nice car so we went full boat...
 
I suppose that's the correct phrase to you. To me it's self-insure. It doesn't really matter as you can call what you wish. We choose to forego insurance for a lot of things in life. I prefer insuring big things and being uninsured as you say for countless small things... and I consider that I am taking on that risk and therefore comfortable calling it self-insurance... but, again, it doesn't matter. Call it as you wish. :)



It depends on how you look at it. On average we are the idiots for paying for insurance because, on average, we will spend more on insurance than the insurer will pay out. By definition that's how it works. I personally would at least want a liability policy but she can easily rebuild if she gets a million in repairs so no biggie... and, over the course of her lifetime she'll likely come out ahead financially!


I think the reason it's a topic is because she is a public figure who gives financial advice. Most people can not afford take on that risk and shouldn't self-insure. Thus, it's probably not smart for her to be talking like that as some of her followers will undoubtedly follow suit.
Is she giving advice or is she simply stating what she does? It is framed as advice? I hardly think so.

She also says things like you need $5-10M to retire, do not retire until you are 70. I would not expect too many people to take her seriously

I do not think this is a big deal. People self insure in a number of areas based on their perception of personal risk and their financial ability to absorb that risk.

If the said that she carried $4M of life insurance does that imply that she advises followers should do the same?

IMHO, anyone who runs out and cancels their homeowner insurance simply because of what Suzy Orman claims she does has a much larger life problem.
 
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Suze is wealthy enough to self insure, I believe we have a few on the forum who have said they do the same. I don't think she is all that frugal, I believe she and her partner have a huge sailboat/yacht they live/travel on also, if I remember correctly. And I actually think she lives in the Bahamas now.
One of my favorite phrases from her is "you have to live below your means, but within your needs".

Her comments were an intro into the rest of the article, which focuses on the exorbitant cost of insurance Floridians are being forced to deal with. That has been discussed here in other forums also.
 
Seems to me that with insurance, you are betting you will need it (and hoping you don't) and the insurance company is betting you won't need it.
 
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