Would you consider cancelling homeowners insurance if.......???

[northwetmossbacks]

Just renewed our homeowners insurance - no $$ drama yet, Western WA State. Two more years and mortgage should be paid off.....just in time to retire (yay!).

Hubby and I were enjoying a summer evening and chatting, and the topic came up........Just hypothetically speaking......*if* your home was mortgage free, and *if* you had the funds, would you consider cancelling your homeowners insurance? If you lived somewhere that *you* consider generally disaster-free, of course!

I know....I know.....if we're talking hypothetical, then I guess we would all have fairy dust and live on Mars But really! We've lived in states where we've paid into our insurance for many years and then the company says no more writing policies in that state, takes our $$, and leaves. Or had situations where we've needed our insurance for covered issues and had to fight to get our money. If you had the wherewithal......would you thumb your nose at them and take the risk?

Keep it nice, folks!

 

[badatmath]

Nope. Just too conservative for that. May not be logical but there it is.

 

[euro]

If you have enough reserves, then you can self-insure almost anything. Health, Cars, House, LT disability, etc etc. The one exception I would say is liability insurance. Most (or all?) states require you to carry car liability and I'd say it is a good idea to carry liability insurance for your home too, because if someone comes to your door, slips and falls, the potential lawsuit can be quite open-ended. So, unless you are Bill Gates, you probably need the liability coverage. Other than that though, if you can, for example, easily absorb the total loss of your house in a fire, then sure, you don't need the hazard insurance.

BTW: There was a pretty long thread on this topic not too long ago

 

[wrigley]

We paid off our house about 5 years ago. We had this very conversation not long after that. We talked about a couple options. Insuring just the structure of the house but none of the contents and cancelling the insurance all together. In the 31 years we have lived in northeast Florida we've had roof damage twice from two different storms and the damage didn't even exceed our deductible. I pay the homeowner's insurance once a year and each year I get that slightly sick feeling in my stomach. We haven't acted on what we talked about yet.

 

[Kings over Queens]

No, cancelling my home policy isn't something I'd consider except under the most extreme circumstance. Obviously, market conditions and coverage availability would be a factor, but it would have to be really bad to consider going bare.

 

[CardsFan]

No way I would consider dropping HO insurance, even when I lived in a large single family home.

Now the decision is even easier. In our townhome, insurance for the building is covered by the HOA fees, so my personal policy is only $350/yr.

Granted, the fees went up $75/mo this year, solely due to an increase in insurance, but it is not like I can opt out. And, based on my quick calculation, my portion of the fees, after the increase, that goes to insurance is still only about $2,000 to $2,500 per year. So, roughly, around 1% of home value.

 

[frank05]

Home insurance also provides first level liability coverage for any third party accidents around the home. I would never drop it due to this reason.

 

[Calico]

No, never. I'm not wired that way.

I look at all insurance this way: I hope I am "wasting" my money paying for it. If I go years without having to make a major insurance claim (homeowner's, fire, medical, car, etc) then that means I am living a blessed life. It means my body and my car are still running in (relatively) undamaged condition, and my house is still standing.

It may be a weird way of looking at it, but it works for me.

 

[Kings over Queens]

Home insurance also provides first level liability coverage for any third party accidents around the home. I would never drop it due to this reason.

Beyond the house too.

Hotel room while on vacation, covered.
Cemetery plot, covered.
Knock an old lady over with a shopping cart at the grocery store, covered.

 

[FindingForward]

My father used to say if you want something NOT to happen, just buy insurance for it. The pricier the coverage, the better your odds against anything happening. He was joking. Sort of. He used to constantly grumble about auto and home insurance costs - but wouldn't dare drop the coverage.

 

[MarieIG]

No I would not.

BTW while in the process of moving, I had a refrigerator hose break, a massive leak, a large part of the house ripped out down to the studs, destroyed cabinets and flooring, appliances mold remediation, asbestos abatement . . . I could go on. Over six figures in damages.

Even with insurance it was extremely high stress.

Not to mention the liability insurance for the premises.

 

[erkevin]

I have owned homes for over 34 years. Never had a claim and paid my insurance every year including the mortgage-free years. A lot of money, that's for sure!

 

[athena53]

Home insurance also provides first level liability coverage for any third party accidents around the home. I would never drop it due to this reason.

That's my main reason. I owe $48K on my mortgage so I could be mortgage-free if I wanted, but I need that liability coverage. I'm not sure how it would work with my Umbrella policy, either. It pays for liability above certain limits I'm required to carry for Homeowners Liability ($1 million?). I'm not sure if I;d be allowed to "go bare" for that layer.

Parents in Myrtle Beach dropped windstorm coverage. Modest house, no mortgage, they figured the land was worth more than the house, and they had the resources to go elsewhere if it all blew away. It worked out for them; Dad sold it at a nice price a year after Mom died.

 

[UpQuark]

I'd have to be so rich that I had my own lawyers, because I figure paying for the insurance makes it the insurance company's problem so they will presumably have/use their lawyers if a loss involves anything that turns into a legal issue.

I did drop FEMA flood insurance on my house after the mortgage was paid off. The house was built 3 feet up and all the neighbors dropped flood insurance when they could, so I felt like it was low risk. Naturally then there were spring floods and a levee broke upstream. Luckily the flood waters petered out at least 20 feet away from the property line near the house, and the only flood related expense I had was getting some more gravel added to the driveway.

 

[SecondCor521]

I have kept my homeowner's policy on my paid off house.

But I've also raised the deductible to the maximum allowed of $10K, which lowers the premium quite a bit. So my premium is about 0.2% of the home value per year.

I can cover $10K if needed. Theoretically I could cover my whole house but I'd rather transfer the risk at the offered rate.

 

[aaronc879]

If the homeowner's insurance got to be so expensive that I didn't think it was worth paying for then I would sell the house. I would never have a paid off house and not have insurance on it though, not even an option IMO. By the way where is this place that has no disasters? I'm not aware of any. If such a place existed i'm sure the housing costs would be too high for me to afford anyway.

 

[RE2Boys]

Nope. On June 11, 2007, our home was hit by lightning. Fortunately, the fire was largely confined to the attic. But the cleanup, repairs, 6 months of temporary living expenses cost the insurance company about 150K. I had retired early(2000) with two pre school boys, so this would have really been a big hit on sequence of returns. The house was fully paid off at the time. Investible assets were about 1.3M at the time. Remember that shortly after the fire was the Great Recession.

 

[northwetmossbacks]

My father used to say if you want something NOT to happen, just buy insurance for it. The pricier the coverage, the better your odds against anything happening. He was joking. Sort of. He used to constantly grumble about auto and home insurance costs - but wouldn't dare drop the coverage.

This is the same reasoning that my mom used for always having a spare carafe for the coffee maker in the cupboard over the fridge!

 

[northwetmossbacks]

Wow, an interesting conversation! Overwhelmingly and solidly sounds like keeping our insurance should/will be the plan when we finally get that last payment through the bank. Thanks for sharing your thoughts on this!

 

[Dash man]

I’d never drop basic homeowners insurance. We’re considering dropping windstorm coverage for our Florida condo. It’s right on the beach, but it’s an eighth floor condo with both hurricane windows and hurricane shutters. The condo association covers the building and we could afford to rebuild the insides should something happen. But I did pay the bill this year, and probably will pay it next year.

 

[MC Rider]

I would only drop it if I had several sh!! tons of money.
Someone mentioned Bill Gates. I bet he has insurance.

 

[razztazz]

If you're looking to play the percentages and save money:

Like someone said above: Liability. See if you can get just liability insurance and "house" insurance, and dump the insurance on the "Stuff inside the house." Personally I believe most of us here have enough money to replace all our "stuff" without a problem. Replacing the structure might hurt depending on your standard of living (100 Grand house vs 1.5 million bucks) and being sued over somebody getting hurt in your driveway will definitely hurt.

But even with a high deductible I don't know how much this would impact your insurance bill.

 

[Aerides]

Liability is the big thing, and I can't get an umbrella without homeowners either. We did remove as much of the item-replacement cost and coverage, didn't help all that much, but since we could refurnish easily we took that down to the minimum.

But no I would not drop it completely, all it takes is a person tripping and falling on your property and your retirement gets really complicated without coverage.

 

[jollystomper]

In the almost 34 years we have owned our home, we have spent about $37,000 on homeowners and liability insurance. Our home is currently worth about 20 times that amount. I do not consider what we have spent to be a lot of money, in comparison to risk we would be taking. if we are able to keep it for, say another 25-30 years we might spend another $60K-$75k over that time. Saving that amount will still not be work the risk.

 

[Mark1]

I really hate paying for insurance commercials, but I kind of view our house as our LTC insurance, so we keep it. However, we do have a high deductible at 3%.