<p>In our case, I know it won’t cover the replacement cost. It is an old house with original moldings. My main objection is for the insurance company to lower the coverage to keep the premium as it was. How is that a responsible behavior? We have an excellent auto insurance on the other hand, just about half of what everyone quotes.</p>
<p>I was sued for $150K in a slip-and-fall case a few years ago. The insurance co. provided and paid for the lawyers to defend me. Without insurance I probably would have been out $25K in lawyer fees, maybe more, because the case dragged on for 5 years.</p>
<p>Even if you don’t need it for the building, it is worth it for liability coverage, IMO.</p>
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<p>I think by offering to lower the coverage to keep the premium, they are basically still raising their rates. Like food companies that sell you a smaller jar of peanut butter for the same price as the old larger jar.</p>
<p>I know from experience that you just can’t buy a certain amount of coverage. Let’s say you have a house that would cost $300,000 to rebuild. You can’t say, “let me just insure it for $200,000 and I’ll pay the remaining $100k out of my pocket if it burns down.” If you could do that everyone would be underinsured. </p>
<p>So I would question your coverage in the past. Your binder should break it down by how much is structure, contents etc. The value of your entire property (land and structure) may be way more than the value of the actual house you are insuring. Because you said you have a lot of land, were they insuring the value of that in addition to the house?</p>
<p>Regardless, I would keep my HO for the liability alone. I also have an umbrella policy that is extremely affordable and gives me a lot of piece of mind. If you have any assets whatsoever, I can’t imagine going without liability.</p>
<p>I agree with notrichenough. My $2 mil umbrella liability requires certain underlying limits. I see homeowner’s as something for catastrophic events. </p>
<p>I have never filed a claim in 30 years…until 3 weeks ago. Several hail storms in July caused much damage and I bit the bullet and filed. I hope I don’t get canceled and regret the move. At this point their reimbursement (check not yet in hand :)) will be close to my 30 years of premiums. I have only been with this co. for 2 years.</p>
<p>My previous co upped the premiums every year. I shopped around and found a significantly cheaper company with the same coverage.</p>
<p>OP-I find it difficult to believe they left your coverage the same for 20 years. Mine forces me to increase every year based on inflation %. So did my previous companies.</p>
<p>Musicmom–that sounds like very reasonable premiums for your coverage. Are you next to fire hydrants in a non-tornado, non-hurricane area?? My biggest problem is I am 10 miles from a paid fire dept (non-volunteer), so it is Class 10 fire risk and much higher premiums. I always wonder about that…I’m 10 miles…what about people in Wyoming or Idaho or somewhere really unpopulated?</p>
<p>BCeagle has posted several times about not having homeowner’s and I always thought, that given his particular situation, it made financial sense to forego it.</p>
<p>surfcity–with some companies, at least in my state, you can just buy a specified amount of coverage. I have done that with rentals in a dumpy little town where I would never rebuild, but would buy a repossessed double wide and pull it onto the lot and then sell.</p>
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<p>Agree. </p>
<p>Here’s how I think about insurance: How does the current known cost of insurance compare to the unknown potential cost of not having insurance? So, for example, I don’t carry insurance on my cell phone because I can easily absorb the maximum potential cost (replacing the phone). </p>
<p>The potential cost of not carrying homeowners is massive; not just replacing the structure if it burns to the ground, but even worse, being sued for every penny I have. OTOH, the known current cost of the premiums is quite manageable.</p>
<p>sryrstress-
we are in northern NJ, 30 miles west of NYC.
Live in town, town being the county seat, in a neighborhood of mostly older homes on small lots. Yes, close to fire hydrant, just across the street.</p>
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<p>Correct. H/O insurance covers “replacement” cost … what it would cost to rebuild.</p>
<p>Plus, of course, the ** replacement cost** for personal items that are lost, stolen or damaged by fire.</p>
<p>I’d check with another company.</p>
<p>I did check with another company. Their quote was what we used to pay before the hike. I am a little weary of insurance companies at the moment and wondered why I need a homeowner’s anyway. My umbrella insurance did the same a few years ago. Suddenly raised the premium a lot. I switched out. And now my homeowner’s. What’s wrong with them? As I said, if the house burned down, I’d sell the lot and get another house. The house is not replacable.</p>
<p>If the house burned down and you had insurance on the house too… You would have more to spend on your future home. In addition, your homeowners would likely pay for temporary accommodations for you. </p>
<p>Personally I think homeowners insurance is like car insurance…if you have a house you should have the insurance…unless you are independently wealthy and the value of your house doesn’t matter to you.</p>
<p>Most value of my house is in the lot. The coverage is not even half of the value, maybe 20%. You need a car insurance to drive legally and I have it. I have an umbrella just in case. But a homeowner’s that covers 10-20% of the value, I feel like I could do without.</p>
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<p>I am sure they raised. The raise was gradual, nothing like 50%.</p>
<p>Insurance is pre-paying for any attorneys you might need for any injury that someone MAY sustain on your premises. That alone can run into A LOT of money if you have to pay out of pocket.</p>
<p>We did make one claim in the years we had homeowner’s insurance, for a burglary. They WAIVED the deductible & paid the maximum they could for all the jewelry that was stolen, which exceeded 10 years of premiums. They did NOT raise our rates after that claim & we have never had to make another claim the rest of the time we’ve had the home (20 years total). Sadly, originally, the insurance used to INCLUDE hurricane insurance but once a huge hurricane hit our state, insurers realized they couldn’t cover the massive losses & have it as a separate policy with its own higher premium now.</p>
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<p>Ain’t it the truth! I live on the coast in south Florida and I have a mortgage, so am required to have homeowners insurance, windstorm insurance and flood insurance. The state-run Citizens Property Insurance Corp. is our only choice for windstorm, and they just raised our premium from $3100 to $5400 (with a $25,000 deductible!). Flood insurance is $2500 and homeowners is $2300. That’s $10,200 per year and climbing every year. We’re planning to move away from here within the next couple of years precisely because we can’t afford to live here anymore.</p>
<p>If we didn’t have a mortgage, we’d definitely dump the windstorm coverage and just self-insure. Unfortunately, that’s not an option. But we’d never be without homeowners and a good umbrella policy.</p>
<p>Wow, patsmom! That’s a lot of money to have to pay for insurance every year and such a high deductible! </p>
<p>Our state is having a hand in running the hurricane insurance & has opted to use the premiums we paid in for all these years for other pressing budget needs so there won’t be money if & when the hurricane does hit & cause damage! <sigh> It’s tough when the legislature doesn’t want to raise taxes & sees this “pot of money,” even though it’s supposed to be to cover hurricane loses.</sigh></p>
<p>“As I said, if the house burned down, I’d sell the lot and get another house.”</p>
<p>And if the lot doesn’t sell, what then?</p>
<p>Pitch a tent 
Or rent or buy a small something and wait it out. It won’t be much different if I kept the insurance since their new coverage won’t cover half of the cost to rebuild. Do they cover whatever you need or do they cover up to the max coverage?</p>
<p>Himom - That must have been a lot of jewelries to exceed 20 years premiums:) I wonder if there is a bias in us to like to believe that insurance payments are worth its dollars. We know we have to pay them more as a group than we ever get back. What we pay them goes to pay claims, make profits and run the business. Clearly, we are not getting back all we paid much like gambers as a group lose money.</p>
<p>The amount they repaid was about equal to 10 years of premiums (premiums for us are more modest than what you’re being charged), but we have now paid for 20 years in premiums. </p>
<p>Some churches “self insure” by pooling resources of church members. It works OK as long as very few claims are ever made but can run up really high if many of the parish/congregation/faithful have a lot of tragedies (especially cancer, hurricane, flood) at similar times. </p>
<p>Insurance is a way of spreading out risk among a larger group–risk sharing, if you will. Many/most of us will never make a claim, except more likely to claim for vehicle, life and health insurance.</p>
<p>You can certainly self-insure–meaning you have the money in the “bank” to pay to rebuild your house and buy all the ‘stuff’ inside if you want. Is this your main home or a second home? If it is your main home, all of your clothing, furniture, etc. would have to be replaced. Do you really want to write a check for that? If so, no reason not to self-insure if you have the money.</p>
<p>I work for an insurance agent representing a major insurance company. We use a computer program to determine the amount it would cost to rebuild the home, and that is the amount we recommend our customers carry; however, they may choose any amount of coverage up to (and a small percentage over) the replacement cost figure.</p>
<p>The liability coverage on the homeowners policy, at least in our state, is a separate limit than the dwelling. In other words, lowering the dwelling coverage does not lower the liability coverage.</p>
<p>Iglooo, if you are trying to decide whether to insure or not to insure, my suggestion is to carry a large deductible. That way, you are mainly insuring for catastrophic losses and not for smaller claims that you can easily absorb. Also, the deductible does not apply to liability claims (at least not in Texas).</p>
<p>Whether you think you need insurance or not should be separated from how you feel about this company.</p>
<p>If you don’t trust them- and you have good reason not to, IMHO- shop around and see what other rates and types of coverage include. Then decide if its worth it or not…</p>
<p>The fact that you’ve been assuming its worth having insurance for 20 years, and assuming you might like to recoup the whole value of your house and sleep well at night not worrying about someone who might sue you…you just might want insurance. </p>
<p>But look at the type of coverage and price you want. What one company is offering and charging tells you little about your options. (btw, we recently shopped around for a new insurer and we were very surprised by the gigantic difference in price quotes and also details of coverage available).</p>