Dropping homeowners insurance and buying a liability-only policy makes sense for certain people. The kind of people who own a $300K home in a hurricane-prone and high-flood risk area, their insurance runs $5,000 a year, and they have two million dollars in liquid assets.
When a total loss wouldn't even cause you the slightest financial problem, and insurance is too expensive with respect to the home value, then maybe.
Dropping homeowners insurance and buying a liability-only policy makes sense for certain people. The kind of people who own a $300K home in a hurricane-prone and high-flood risk area, their insurance runs $5,000 a year, and they have two million dollars in liquid assets.
When a total loss wouldn't even cause you the slightest financial problem, and insurance is too expensive with respect to the home value, then maybe.
Yes, I have enough liquid assets to pay for equal replacement. Total loss is the only thing that would really hurt. Everything else, the high deductible prevents me from ever filling a claim.
MINO?
You are aware that replacement costs is not the same as the value?
And while the place is being replaced; you have to live elsewhere.
And then you have the furnishings that also need replacement - usually 20-30% of the cost.
If you have the liquid assets and no mortgage; go for it; you feel you have the money.
If you have the mortgage; then pay it off and go bare. Just make sure you know what the actual overall costs can be.
A simple water damage from a backup sewage line can run $5-20K.
Is your deductible that high?
Even then, that's about 60 years of insurance premiums to come out square for a $300K loss. If you live in a high risk area where the chances of a total loss are so much greater, doesn't it make even more sense to keep the coverage? Sure, you could cover it, but why would you; especially when you could have multiple catastrophic losses within the same 60 year period?
Drop it now, duh.
Have fun watching your house burn down before the end of the year!
Do you have a mortgage or is your home paid off? If the former, you're pretty much required to carry insurance by contract.
have you looked into a dwelling fire policy? they cover certain named perils (not just fire) and ONLY for the house, not the contents. it is usually used for rental properties, but you can also use it for your home, though its not generally recommended.
No. I need to shop around for a new policy. I've been with State Farm for over 20 years, and I think they're taking advantage of my loyalty. I'm paying ~$1,400 for $340k policy with $2.5k deductible. The houses in my neighborhood go for around $430k but that's market value. I know I can rebuild for cheaper than the market value especially since I own the land. I don't plan on moving or selling the house until I retire which is another 20-30 years off. It just seems like a waste to pay another 20-30 years when chance of me filing a major claim is almost nil.