I paid cash for my house 6 years ago. Was going to buy insurance but they wanted to UP charge me because I didn’t have insurance in the apt I lived in. (Which didn’t make sense because I was worth far more than my belongings)
So, Ive went without. Saved roughly $3200-3800 over the years. But, my hot water heater went out and ruined my foyer wood floor.
Haven’t bothered to replace it. I figure I will have it tiled and my tile man said it would be best to do it AFTER I put new carpet down.
And Ive put off putting new carpet down because my stocks went down so much. (Up some, but still down from the peak)
Just curious how many others go without ?
Am I crazy ?
I figure its a good wager for me. If it burns down, I will just have to accept the loss and buy another. (Lost more in the market)
I figure my house is worth somewhere between $75-95k.
What are the odds that someone walks on my property withOUT permission, hurts themselves, sues me AND WINS ?
Isnt that about as small as my house burning down ?
Id say theres less than a 2% chance of either happening so the expected value of $600+ per year for 25 years into the future has to be greater than the potential loss multipled by the chance of that happening.
I realize that everyone cannot do it.
But not everyone worth what I am lives in such a modest house.
Deth,
I DID pay cash for the house. And I have saved over $3000 over the last 6 years. The foyer floor would have been under my $1000 deductable (If I would have bought insurance) so it wouldnt have been covered anyway.
And if the house burned down, I wouldnt HAVE to rebuild. I could just buy another house with the cash I have in savings. (Or stocks)
Sounds like you just cant imagine someone living below their means.
Yes, I could live in a $400,000 house.
In that case, I would HAVE to have insurance because a $400k loss would be much more bothersome than a $75-100k loss.
Tags: Buy Insurance, Homeowners Insurance, Hot Water Heater, Odds, Wood Floor
Yes, you’re crazy.
Few people understand that insurance should only be used for those things you cannot afford to replace. CANNOT AFFORD not feel uncomfortable paying. If you can afford to replace and/or live without your house if you should lose it, then, statistically, you are better off doing what you are doing, which is essentially self-insuring. If this little known fact were not true, then the insurance companies could not make money, as they must always charge more in premiums than they payout in claims.
At least if something happens to your house, you don’t have a mortgage to pay off. Going without homeowners insurance is crazy even with this circumstance. With the insurance (depending on the type of loss), you can get your home rebuilt and not be out of a lot of $$ AND you can get your contents replaced also. In your situation, you are going to have to come up with all that $$.
Your home is one of your most valuable investments. That is why it is so important to have the right* homeowners insurance, which will provide broad coverage for losses that can arise from owning your home.
Homeowners insurance provides you with broad coverage for losses that can arise from owning or renting out your home. The types of losses for which you can obtain coverage under a homeowners insurance policy include:
Damage to your home and personal property
Fire and smoke damage
Theft and vandalism
Water damage
Liability coverage for accidental injury to another person or property
Total loss due to fire
It’s really your decision.
What you are doing is referred to a self insuring. NOT a good idea for most people as they do not have an extra $75K – $100K cash laying around to replace their home.
What you are doing is a gamble; if you don’t suffer any losses, you win. But as you pointed out, if it burns down you are out $75-95K. That’s a BIG risk.
Insurance is also a gamble; you’re betting something will happen and the insurance company is betting something won’t. But it is a bet with a considerably smaller risk for the insured.
Yes, you’re crazy. Assuming a $100,000 property loss wouldn’t kill you, financially, that means you have assets.
One big, fat slip and fall lawsuit, and you’ve lost EVERYTHING you have. You need the homeowners insurance for the LIABILITY coverage, even if you feel you can self insure for the property.
Even if you are not concerned about a loss to your home since you don’t have a mortgage to pay off, do you have enough in the bank to cover a lawsuit if someone gets hurt on your property?
Honestly, I would NEVER go without insurance. But if you really want to risk it…
yes, you are crazy – if your house burns down, how are you going to rebuild it with no insurance??? – you need to insure it for the REPLACEMENT value – which is probably at least double what you think the house is worth – you have to pay TODAY’s labor and material costs
insurance premiums are always paid in advance – what kind of fantasy world are you living in??
you say you would just buy another house if this one burns down – with what? the $3800 you have saved over the years? that won’t even be enough to tear down what is left of the burned down house.
homeowners insurance costs about $500 a yr – if you can’t afford that, how can you afford to pay cash for a house? you make no sense at all
You can easily check your quotes in internet, for example here – homeinsurance.awardspace.us