Homeowner's Insurance: A Waste of Money?

[TheBlackRabbit]

Say you have a house with about 95k invested. Homeowner's insurance runs about $1500 a year for $2500 deductible 200k policy. You live in an area with no flood risk whatsoever, very little tornado risk, no trees that could easily fall on your property, and you plan on installing a 8 channel DVR security system with 24/7 monitoring. You own the equipment and monitoring is less than $20 a month.

Having just renovated a foreclosure, anything outside of a total loss or the entire house being robbed of every single possession would likely be repairable for less than twice the deductible.

By the time my daughter is 18 the savings would equal $ 35,831.90, assuming monthly deposits and 3% interest.

What would I do if my house did burn down?

Probably buy an RV while I hire gradually assume the role of Foreman for my makeshift alcoholics anonymous construction crew and use around $50,000 to build a new home on my land.

Thoughts?

 

[rcpratt]

I think you need to get another homeowner's insurance quote.

 

[Mixolydian]

Insurance is always a waste of money - until you actually need it.

You need insurance.

 

[mugs]

We don't pay even half of that for insurance on a $450k house (not sure how much of that is structure, my wife takes care of this stuff). And I definitely couldn't rebuild my house for $50k. Imma keep my homeowner's insurance.

 

[T9D]

What if someone gets hurt on your property and sues you?

More then likely the odds are you'd be fine. But it only takes that one time when something happens.

What about in 30 years when your house is worth like $300,000 or something? And the cost to rebuild is 4 times more. It's not worth the worry.

 

[Gunslinger08]

We don't pay even half of that for insurance on a $450k house (not sure how much of that is structure, my wife takes care of this stuff). And I definitely couldn't rebuild my house for $50k. Imma keep my homeowner's insurance.

I think I need to get some quotes. Mine is about $700 for no where close to that much house. My car insurance also went up from the last 6 month period, with no accidents/tickets.

 

[T9D]

Yeah my house insurance is $150 a month for 3000 sqft, 3 stories, and separate two car garage. Plus over a million dollars liability insurance.

You need to get all your insurance in one place for good discounts.

 

[EagleKeeper]

I had a sewage backup in Jan at daughter house I purchased in 2009 for 200K.
Total cost to State Farm was well over 25K
Rebuild est cost $295k

Insurance was 1200/yr
$1000 deductible

 

[Red Squirrel]

What if for the few minutes you are not watching the DVR something electronic randomly decides to catch on fire? By the time you see it, call the fire dept, and they go there, it's too late? Or you get sewer backup, or a pipe bursts, etc.

While I don't agree with the fact that car insurance is the law, and the fact that it's so damn expensive, I do agree that house insurance is a good idea to have. Though if I had the choice I would not bother with car insurance. I paid 3 grand for my car, over the course of 2 years I'll pay more than that in insurance. Would rather just take the chance. But of course it does not work that way.

House insurance is about the only kind of insurance that actually is good value to have. Now if you own many buildings and they all make money (Ex: rental units) then maybe it makes sense to not insure as it would cost more to insure them all than the cost to replace one. Odds are pretty slim you lose em all at once to some catastrophe unless it's in like Florida or something.


When I originally bought my house I was paying $160/mo for insurance. Given it was my first house, I figured that was the going rate, and never thought more of it. Then later I got another quote from another place for ~40/mo! I almost feinted. Did not realize the first insurance company was taking me to the cleaners. I promptly canceled.

 

[Red Squirrel]

Actually, quick question on house insurance. Say I build my basement myself, and get sewer backup, do they cover that? Or do they figure since I saved money by building it myself, I can just rebuild it myself again? Do they only pay for materials? I know if that happened I'd want to hire it out just to have it done quicker and be back in the game.

 

[TheBlackRabbit]

Liberty Mutual and about 3 other quotes were all in the same neighborhood in GA. No good discounts to combine considering the way I have everything structured.

It is an 8 person household, 2 family household with 2 kitchens and 3 floors. There is virtually always multiple adults home due to this arrangement.

I have 5 fire detectors, 2 have carbon monoxide detection as well. They are loud as shit and ultra sensitive; they go off during routine cooking all the time.

Food for thought: Anyone saying I am negligent for not having home owner's insurance, well I could throw the same charge at you for not having a security system to deter burglars, etc. In a perfect world I suppose we would all have both: insurance + surveillance.

 

[Gunslinger08]

Actually, quick question on house insurance. Say I build my basement myself, and get sewer backup, do they cover that? Or do they figure since I saved money by building it myself, I can just rebuild it myself again? Do they only pay for materials? I know if that happened I'd want to hire it out just to have it done quicker and be back in the game.

If your locality has a permit process and you don't follow it, they could potentially deny your claim. Get a permit. Getting a permit doesn't mean you can't do it yourself - just means you have to actually do the work the right way.

The things they cover and the amount they pay is dependent on your policy. You should speak to your agent. I believe that a lot of insurance companies now default to "full replacement value" instead of "depreciated value."

 

[TheBlackRabbit]

If I was completely naked I could understand as well, but I have no doubt I could build another house from scratch. Yes I would become a foreman and get all necessary permits and licenses myself and hire my own crew. No, this would not be anything unusual for personality and history.

 

[Blieb]

Home loan is a secured loan.
When your house blows up, it becomes an unsecured loan.
Bank will call mortgage due.
So they CYA by making you have insurance.

If you didn't have a loan, you can drop insurance.

 

[dud]

Food for thought: Anyone saying I am negligent for not having home owner's insurance, well I could throw the same charge at you for not having a security system to deter burglars, etc. In a perfect world I suppose we would all have both: insurance + surveillance.

Unbelievable bombastic behavior.

You ask for advice ... and you can't take the heat when you get it.

If you can't stomach what your reap the exit is that way -------->

 

[Rudee]

Holy crap. You are certainly paying a lot for homeowners insurance where you live. My home is worth just under $400k, and with a $1000 deductible I only pay $980 a year for home insurance with full coverage.

 

[mugs]

If I was completely naked I could understand as well, but I have no doubt I could build another house from scratch. Yes I would become a foreman and get all necessary permits and licenses myself and hire my own crew. No, this would not be anything unusual for personality and history.

OK, then what are you looking for from us?

 

[TheBlackRabbit]

Unbelievable bombastic behavior.

You ask for advice ... and you can't take the heat when you get it.

If you can't stomach what your reap the exit is that way -------->

What about my comment says I "can't take the heat"? Sorry, but I missed it.

This is why I post; I enjoy the challenge.

My 1st cousins, one of whom was on the board of major US bank for years and is current head of strategy for a capital management firm, and another who is part of the "management team" of a company with 300 employees, told me that my "math was wrong" and dismissed me without wanting to hear me out.

I told them my math wasn't wrong...I don't take kindly to my math being declared "wrong". Those are some fighting words, and I don't go down without putting up a good fight.

 

[JEDI]

Yeah my house insurance is $150 a month for 3000 sqft, 3 stories, and separate two car garage. Plus over a million dollars liability insurance.

You need to get all your insurance in one place for good discounts.

separate $1M umbrella policy, i hope.

I had a sewage backup in Jan at daughter house I purchased in 2009 for 200K.
Total cost to State Farm was well over 25K
Rebuild est cost $295k

Insurance was 1200/yr
$1000 deductible

wait.. they rebuilt the house because of sewage backup?

 

[HeXen]

Food for thought: Anyone saying I am negligent for not having home owner's insurance, well I could throw the same charge at you for not having a security system to deter burglars, etc. In a perfect world I suppose we would all have both: insurance + surveillance.

I have both, guess I live in a perfect world. But really, neither is that expensive when you consider the cost of your home and the goods you have invested in it unless you live in the ghetto or whatever and have little.

But for the average joe who owns a home, is it really so that much more fcking expensive compared to everything else many of us spend yearly? If it is then there must be some high risk factor due to location. If your home and goods inside is a high investment that you cannot easily recover from, you need insurance. If you can financially buy and build your own house right now and replace all your goods then you don't but then what the fuck are you doing buying a used home? However it sounds more like your a tightwad in which case I would wonder about your ability to easily replace it all plus the cost of living elsewhere while you build it yourself. Always look into the cost of insurance before buying any home.

 

[TheBlackRabbit]

OK, then what are you looking for from us?

To hear alternate opinions, everything from the highly technical/mathematical to the "knee-jerk" OMG you have to have insurance BECAUSE....JUST BECAUSE IT'S A SOCIAL NORM AND I HAVE NOTHING BETTER TO SAY!!

 

[TheBlackRabbit]

Hexen: I'm highly educated but have had quite the "hard knock life". My behavior makes perfect sense only when placed against the context of my history. My highly unusual history makes my behavior seem odd to many.

I am not "loaded" but have quite a bit of savings from my grandmother passing away and leaving her money to my mother, who entrusted it to me. My elderly, disabled father, schizophrenic, permanently disabled sister, and mother who just got a stage IV cancer diagnosis live with me, my girlfriend, my girlfriend's 2 teenage nieces, and my 11 month old daughter.

I have been a victim of my highly inquisitive, type B, alcoholic personality combined with the reverse Robin-Hood economy; I have no income but am finishing up a Master's and have no idea what the future holds.

In summary: I have to make the most of what I have in case the past is predictive of the future.

 

[dud]

My 1st cousins, one of whom was on the board of major US bank for years and is current head of strategy for a capital management firm, and another who is part of the "management team" of a company with 300 employees, told me that my "math was wrong" and dismissed me without wanting to hear me out.

I told them my math wasn't wrong...I don't take kindly to my math being declared "wrong". Those are some fighting words, and I don't go down without putting up a good fight.

Your math is wrong ...

 

[boomerang]

What if someone gets hurt on your property and sues you?

You've already made your mind up OP and are just looking for confirmation but this is your biggest concern. This is the kind of thing that could have you paying for the rest of your life.

But you might as well ask to have the thread locked because you've made up your mind, unless of course you just like to argue.

 

[dud]

You've already made your mind up OP and are just looking for confirmation but this is your biggest concern. This is the kind of thing that could have you paying for the rest of your life.

But you might as well ask to have the thread locked because you've made up your mind, unless of course you just like to argue.

A most intelligent assessment that will most likely be ignored by the OP.