Homeowners Insurance Question

[astrochex]

Wife and I have just paid off the mortgage of our home.

We will be looking to see how we might adjust our policy to wisely reduce our cost while retaining adequate coverage.

Thanks for the advice.

[Alan A]

Why does one relate to the other?

[Dixie]

Could you kindly expound on what risks you're wanting to mitigate? Words like adequate , and wisely, aren't very quantitative.

[astrochex]

Its a fairly new build home, only 7 years old. I have not checked our policy lately, but I am under the impression that the lender required us to maintain a certain amount of coverage. I will do my homework to confirm that.

Storm damage, particularly in the form of hurricanes is the primary risk. Flooding as a result of storms is a lower probability risk.

[Evans, Marv]

The insurance company usually determines the amount of coverage required if you have a mortgage, and insurance is mandatory. If you don't have a mortgage you can take your chances. I imagine you can pick & choose the coverage you want, but you need to be careful that the coverage you choose can actually cover possible damage you're anticipating the possibility of. They over cover some things like interior contents lots of times, so you end up paying more of a premium on those kids of things. You may be able to reduce coverage & preuiums on things like that, out buildings, etc. I doubt you can have the luxury of reducing coverage like you mentioned - hurricanes covered but floods not. I'm in a very high fire zone with sky high coverage costs and companies jumping boat on a regular basis.

[Dixie]

Originally Posted by astrochex

Its a fairly new build home, only 7 years old. I have not checked our policy lately, but I am under the impression that the lender required us to maintain a certain amount of coverage. I will do my homework to confirm that.

Storm damage, particularly in the form of hurricanes is the primary risk. Flooding as a result of storms is a lower probability risk.

Thank you. Living in Florida my firsthand experience is that flood and wind are the bulk of your expense. Since you own the property outright, you could forego these and buy a liability policy. I'd only advocate this approach if you can afford to walk away from the loss of the property when a hurricane does hit.

It's analogous to me showing up at the track with a brand new GT3 or a 1999 Dodge Neon. Totaling the Neon would smart, but totaling the GT3 would financially ruin me. On the other hand, totaling either would probably be no big deal for Bryan Moynihan, CEO of Bank of America.

[LWJ]

Well, how much risk do you want to take?

You can self insure. Your call. BUT, I would never self insure the liability portion of homeowners coverage.

I do commercial insurance for a living. Happy to chat.

[id10t]

From what I recall of my policy here in Florida, hurricane is kinda a sub-policy and flood is a totally different policy (I'm not in a flood area). If you can afford some loss but not a wipe-out, look at simply raising deductibles.

[flatbutt]

First of all it is MHO that you to carry replacement cost so you can rebuild if you must. Secondly comb through their exemptions very carefully.

[Por_sha911]

The old adage is "if you don't have the cash to replace it, you need to cover it". Also, you are at greater risk of an ambulance chasing lawyer when they know you have assets so having the house paid off makes you a bigger target.

IMO reducing your coverage is not the best idea. If you are looking to save some money, consider a larger deductible. It won't slash costs but it is the safest way to save a little without putting your self at too much risk.

[Baz]

It's going to be different for everyone.

For me, once I paid off my mortgage, I couldn't wait to drop my homeowner's insurance....which I did....and haven't had any regrets since!

All the years I was forced to pay it and never had a claim. But my premium increased, no matter how much I shopped around. Like I said....it's going to be different for everyone. For me, it was an opportunity to be free to make my own decisions on how best to invest my money.

I've owned my home since 1996 and we've had heaps of hurricanes and other weather related events hit our area, but I never sustained anything serious enough I couldn't repair on my own, anyway. At very nominal cost.

My house was built in '62 and is mostly block, single story, and resides atop a dune ridge. It's almost like a bunker in fact. I just replaced the original asphalt shingle roof with aluminum 2 years ago and that makes it even more weather proof now.

I also live 2 blocks from the ocean and 1 block from the Intracoastal waterway and some would say that makes me more susceptible to storm damage, yet it was my mother's house on the mainland that suffered damage from last year's hurricanes...not mine.

So like I said.....it's going to be different for everyone.

[Baz]

And don't forget that you also have FEMA to assist you if indeed you sustain a storm strong enough for your area to be declared a disaster.

[911 Rod]

The thought of changing my homeowners insurance never crossed my mind when I paid of my mortgage (twice).
Do you have collision on your vehicles?

[MBAtarga]

A $40-50k hit for losing a vehicle is one thing. A $400-500k or maybe now - a $1M hit for losing a house is another.

[Chocaholic]

Increase your deductible as high as you’re willing to shoulder in the event of a claim. I always carry high deductibles.

[Baz]

It's called "Risk Management" and like I said.....will be different for everyone.

I paid for my new roof with the $ I saved. For me, that was a better value against future storm damage than paying those premiums.

[id10t]

Originally Posted by Evans, Marv

The insurance company usually determines the amount of coverage required if you have a mortgage, and insurance is mandatory. If you don't have a mortgage you can take your chances. I imagine you can pick & choose the coverage you want, but you need to be careful that the coverage you choose can actually cover possible damage you're anticipating the possibility of. They over cover some things like interior contents lots of times, so you end up paying more of a premium on those kids of things. You may be able to reduce coverage & preuiums on things like that, out buildings, etc. I doubt you can have the luxury of reducing coverage like you mentioned - hurricanes covered but floods not. I'm in a very high fire zone with sky high coverage costs and companies jumping boat on a regular basis.

Im in N central Fl and while the Santa Fe river is 15 miles away I am well outside the zone of any recorded flood

So yeah I have hurricane but no flood coverage

[Zeke]

Originally Posted by Baz

And don't forget that you also have FEMA to assist you if indeed you sustain a storm strong enough for your area to be declared a disaster.

If you have 4 years to wait....

[Baz]

Originally Posted by Zeke

If you have 4 years to wait....

That's now how it works here......they are quick! Like a couple weeks at the most....

[drcoastline]

Originally Posted by astrochex

Its a fairly new build home, only 7 years old. I have not checked our policy lately, but I am under the impression that the lender required us to maintain a certain amount of coverage. I will do my homework to confirm that.

Storm damage, particularly in the form of hurricanes is the primary risk. Flooding as a result of storms is a lower probability risk.

I am an insurance broker in NJ, our market isn't much different than Florida. There are several aspects to your question.

1. What is your appetite for risk? What does your financial picture look like?

2. The Florida Insurance Market is in turmoil right now much like ours. Carriers are leaving your state in droves and those left are increasing rates. Our carriers are requiring 100% replacement cost coverage. They will run a replacement cost estimator and increase or decrease your coverage accordingly and bill you or send a refund.

3. the lender required you to carry either the loan amount or the replacement value of your dwelling.

Do you have an agent? Have you consulted with them?