Realities of Honeowners Insurance

[MSCH]

I no longer have homeowners insurance on my house here in Florida.

I can afford a new roof after a hurricane or storm.

I know. I am almost there.

friend of mine lives in Homestead Fl, just north of the Air Force base.. he purchased his small house there after Hurricane Andrew.. he paid 8000 for it in 1993... it was 4 concrete walls on a slab.. nothing else left of it, just four walls on a slab. he rebuilt the house out of salvaged materials, as all the wood and stuff he needed was free for the picking after Andrew.. so as he says he has about 20,000 in this house.. he stopped paying for insurance when it hit 7000 a year.

 

[y_p_w]

Article says a middle-class home has an insurance bill of $7k? In a few select areas maybe but there is no way that is indictive of the majority. A quick search found that according to Bankrate the average premium for a home worth $250k is about $1500/year.

I'm kind of surprised that I'm paying about $1700 a year for a home worth considerably more than that. In California with suburban wildfire concerns. However, mine is for replacement costs where dwelling replacement is considerably less than the total value of the property. At least around here, many 3-4 br single family homes have the majority of their value in the land.

That being said - I had to shop around where my previous renewal was about $2600, which is why I switched.

 

[JTK]

I can afford a new roof after a hurricane or storm….. also no flood insurance..

I get it. I know in my current situation, $7K/yr on top of all my other bills would not be possible.

What happens if one of the roofers sues you, or the house (gawd forbid) is a total loss due to a fire, storm, etc.?

You either use all your savings towards another home, or start another mortgage late in life.

 

[PandaBear]

I'm kind of surprised that I'm paying about $1700 a year for a home worth considerably more than that. In California with suburban wildfire concerns. However, mine is for replacement costs where dwelling replacement is considerably less than the total value of the property. At least around here, many 3-4 br single family homes have the majority of their value in the land.

That being said - I had to shop around where my previous renewal was about $2600, which is why I switched.

I was told (I think by Critic) that most likely because slab foundation stays "functional" after a total loss, or something like that. If rebuilding as before the underground portion likely remains usable after a fire or flood.

 

[The Critic]

I understand what you mean. However the reason everyone has a different quote is either they provide a different service or a different risk management. You either cut some services (or make it self service), or you cut the boundary between go / no go, which bin the policy falls under, how much does it cost to cover, etc differently or else everyone should have the same quote.

Reason some of them leave a market vs others not leaving, would be how these are calculated and what they bet on. Some will make more and others would lose their shirts even with aggregation as a result. This is risk management.

It is a bit more complicated than that, but you’re on the right track. I would say the expense component from servicing is not the issue.

 

[RhondaHonda]

I no longer have homeowners insurance on my house here in Florida and stopped renewing the policy about 8 years ago.

I can afford a new roof after a hurricane or storm….. also no flood insurance.

Totally uninsured? What if you have a fire? I get knowing the odds of storm damage and what replacing a roof can cost but a fire could get real expensive, real quickly.

 

[Dave Hess]

I get it. I know in my current situation, $7K/yr on top of all my other bills would not be possible.

What happens if one of the roofers sues you, or the house (gawd forbid) is a total loss due to a fire, storm, etc.?

You either use all your savings towards another home, or start another mortgage late in life.

Nothing prevents a shady roofers suing you even if there was a ‘Platinum‘ homeowner’s insurance policy. It happens all the time with various scumbag contractors hired throughout the USA.


If my house was a total lost due to hurricane or fire I would buy another without getting a mortgage. I’ve made some good financial decisions (over the past 30 years) and home loss would not affect me to have me collecting shopping carts at Walmart when I’m 70 years old.

 

[Hermann]

I only carry high limit liability ($70/yr) on my 2021 BMW cycle. The average for full coverage is close to a $1000 a year.

 

[RhondaHonda]

Nothing prevents a shady roofers suing you even if there was a ‘Platinum‘ homeowner’s insurance policy. It happens all the time with various scumbag contractors hired throughout the USA.


If my house was a total lost due to hurricane or fire I would buy another without getting a mortgage. I’ve made some good financial decisions (over the past 30 years) and home loss would not affect me to have me collecting shopping carts at Walmart when I’m 70 years old.

I get that and I don’t mind buying a roof but don’t want to spend a million+ to rebuild after a fire plus another half million on contents to save $5-10k a year here. Maybe in Florida the numbers make more sense. If I could get fire and liability insurance for a few thousand I’d do it.

 

[Dave Hess]

Ever person has a different financial situation.

What’s the likelihood of a catastrophic loss ?

 

[gfh77665]

What’s the likelihood of a catastrophic loss ?

Thats what I have tried to quantify as much as I could. Unless you own a cabin literally on a sandy beach, the likely hood of a total loss is pretty low. For typical homes, roof damage from hurricanes is a near certainty within 50 miles of the coast, and still likely from 50-100 miles. After that it diminishes. The likely hood of a catastrophic loss like the walls being blown down is quite small.

My thinking is I can repair roofs for less than the cost of the insurance premiums over time. My investment properties are strategically insured. The one or two "I Think" could flood carries flood insurance, only. The one or two "I Think" could have high wind exposure, I carry windstorm, only. The others I don't insure at all (except liability).

 

[MSCH]

I get it. I know in my current situation, $7K/yr on top of all my other bills would not be possible.

What happens if one of the roofers sues you, or the house (gawd forbid) is a total loss due to a fire, storm, etc.?

You either use all your savings towards another home, or start another mortgage late in life.

people have to make hard choices. That is all it comes down to.
it is like every other important choice a person has to make in life
some people accept more risk than others.

 

[John105]

I no longer have homeowners insurance on my house here in Florida and stopped renewing the policy about 8 years ago.

I can afford a new roof after a hurricane or storm….. also no flood insurance.

Even though my insurance is 3 figures and just crossed into 4, imagine if I had done what you did 21 years ago? Although I had a mortgage until 2013. So in reality, what if I had done what you did 10.5 years ago?

What truly gets me, is how most policies are overinsured to a point where the insurance co. would never pay the amount written, even in a total loss.

 

[brianl703]

You can always tell the houses here in Virginia that don't have homeowner's insurance. They're the ones that the county has to clean up months or years after they burn down.

 

[road_rascal]

We live in a townhouse and have a basic HO6 policy. At our last association meeting it was mentioned that everyone should have loss assessment of at least $65,000 on their individual policy in case we have another hailstorm/catastrophic loss on the buildings, even though we have a Master Policy for the association. Since we have $16,000 currently I called our agent and the most we can get is $51,000 and most insurers won't go past $25,000. Our agent also mentioned that he writes a lot of policies in FL and most basic coverage is closing in at $7800/year WITH a $7500 deductible. It's getting crazy. When we first bought the townhouse the basic HO6 policy was under $500/year in 2016 and now it's a bit over $800.

 

[John105]

We live in a townhouse and have a basic HO6 policy. At our last association meeting it was mentioned that everyone should have loss assessment of at least $65,000 on their individual policy in case we have another hailstorm/catastrophic loss on the buildings, even though we have a Master Policy for the association. Since we have $16,000 currently I called our agent and the most we can get is $51,000 and most insurers won't go past $25,000. Our agent also mentioned that he writes a lot of policies in FL and most basic coverage is closing in at $7800/year WITH a $7500 deductible. It's getting crazy. When we first bought the townhouse the basic HO6 policy was under $500/year in 2016 and now it's a bit over $800.

Man, at what point does there have to be some semblance of sharing the risk, and having the risk averted by paying for insurance. Take life insurance and annuities. Used to be the same insurance co. sold both, to the same person. Basically, whether you live or die, they win. And they charged a mortality risk expense on both products, in case the actuaries were wrong. I always felt that was unfair. So, never, ever, ever, get an annuity.

Now, the life insurance co's interests, are aligned, with the policy holder. Both parties hope the policy holder lives, forever.

When the insurance co sets a $7,500 deductible, I would think that the average joe simply has no choice but to self insure.

But what's really gonna happen is society will have to make up for the $51,000 is it? i.e. the association