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Homeowner's Insurance = Gambling

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Lifer
I guess any insurance is really. You pay X (too many ) dollars each policy period hoping you won't have to pay X (WAAYY) more dollars later.

But damn, I hate paying a couple of grand a year for 'nothing'. I could not pay it and gain some interest, but one wild storm and it could all be gone in minutes, strewn across an acre or more of open field.
 
And the beauty of it all is, if there's a hailstorm anywhere in the country, your rates will go up next time you renew.
 
Pooled risk -- we call it. I had a former high-school classmate that did very will in the insurance game. Some of his classmates think that he was a scammer. I can imagine him taking money from the pool to enrich himself.

So I mentioned this term -- "pooled risk" -- to him. He didn't seem to know what I was talking about. But he would thump his chest, talking about making $8 million in his best year. A little tiresome to hear it.
 
Insurance is for stuff you can't pay for out of savings. So some ATOT ballers might be able to pay for a new house from savings; they don't need home insurance. For the rest of us (who are homeowners) it's important.

On the flip side, that's why it's important to have a decent emergency fund: It means you don't have to pay for extended warranties on everything.
 
I always felt kind of the same way, especially watching the rate go up every couple years and knowing I'll probably never get that money back. But if I didn't have insurance it would also give me anxiety that anything might happen to the house when I'm not home or while I'm sleeping. So guess you're really just paying for peace of mind and to sleep better at night.

Be nice if insurance companies would reduce your rate based on lack of claims though. Like once you paid in enough to cover a typical incident they would drop you to like $50/mo or something. I assume most of them are investing that money anyway, at least it would make sense. So they are making lot of money off the interest alone.
 
Homeowners is def a gamble, but usually has some liability insurance tied in with it.
With the rise of private equity financed litigation, the chances of getting sued have risen(as have the costs of insurance).
 
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