# Continue with home insurance when paid house paid?



## bootsnixon (May 10, 2011)

Hi guys, enjoy the site. The wife and I were having a discussion about house insurance and if we would continue to have it after our mortgage is paid off. In general we are not fans of insurance and generally keep the minimum required. We expect to have a decent nest egg by the time our mortgage is retired so we could absorb some insurance type setbacks so the thought is enticing. I sure grumble every time I pay the insurance and we have never made a claim. Are we crazy, does anyone do this? 
Cheers,
boots


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## Four Pillars (Apr 5, 2009)

House insurance is cheap. 

Paying for a brand new house is not. 

Keep the insurance.


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## LBCfan (Jan 13, 2011)

If replacing your house would be no big deal financially (ie. it's a single digit percentage of your net worth) consider dropping the insurance. Then reject the idea.


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## Karen (Jul 24, 2010)

I can't believe you're even asking the question - I think anyone who doesn't carry insurance on their house needs their head examined.


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## brad (May 22, 2009)

Yeah, let's just say hypothetically that you paid $200,000 for your home, and everything in your home (all your possessions) would cost another $50,000 to replace. If you can afford to lose $250,000 if the house burns down, you could consider cancelling your home insurance. But you also have to consider liability: if you forget to shovel your walk one winter's day and a visitor slips, falls, becomes a quadriplegic, and sues you for $1 million, you need to be able to afford that too. You'd have to be awfully rich in order to be able to comfortably self-insure your home, and even then it would be a bad decision.


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## dogcom (May 23, 2009)

There are two kinds of insurance that we must have and that is car and house insurance. The liability issues alone as brad mentioned could ruin you and that does not take into account replacing your car or house. I remember when my step son first got his drivers license at sixteen and we asked the insurance agent about liability and he told us that I am liable until he was eighteen. Hearing this I said what is the maximum coverage you can get and he said 18 million dollar coverage. It cost an extra $150.00 a year so I told my step son your buying that if you want to drive while I am liable for any costs over the coverage.


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## Dana (Nov 17, 2009)

Even if you can easily afford to replace your home in the event of a catastrophe, can you afford to pay the settlement resulting from a lawsuit if someone is injured on your property? House insurance is pretty cheap, but peace of mind is priceless.


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## Guest (May 11, 2011)

bootsnixon said:


> I sure grumble every time I pay the insurance and we have never made a claim. Are we crazy, does anyone do this?
> Cheers, boots


Well, I'm paying $1018 for replacement of $458K, liability $2M, $1K deductible ... fwiw, I see the $1018 as a call option with strike price of $458K, $2M ... not a bad deal. If the structure replacement was maybe ~$200K, I might consider self-insuring the structure, but I'd still certainly go with liability ... but geez, that $1018 isn't too bad as a no worries solution ... and I too really hate paying insurance, almost as much as I hate paying the tax on the insurance ... &%$#@


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## MoneyGal (Apr 24, 2009)

Raise your deductible (like to $10K) to provide catastrophic coverage only (plus liability) and your premiums shrink significantly. Problem solved?


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## bootsnixon (May 10, 2011)

You make good points about the liability. Are you able to raise your deductible as high as $10000 or even higher? I would certainly do that ( higher even I think) if the yearly savings warranted it. I usually ask for a high deductible to lower the rate but have never asked if I could go that high.

boots


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## I'm Howard (Oct 13, 2010)

I'm paying $700 for replacement of $750K??


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## Cal (Jun 17, 2009)

Some insurance companies will actually give you a reduction on your premiums if your house is paid for.


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## MoneyGal (Apr 24, 2009)

bootsnixon said:


> Are you able to raise your deductible as high as $10000 or even higher?


It's possible but I only know a handful of people who have successfully done it.


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## bootsnixon (May 10, 2011)

Thought I would update this thread now that I've talked with my insurance provider and asking a few questions. Yes, some companies will give discounts if the home is mortgage free. CAA, my provider, does not. You can raise your deductible to whatever you want, but they will really try to talk you out of it. I got 4 different deductible quotes and each larger one, they cautioned me more and more. 
The quotes were for: building $372k, detached building $56k, personal property $279k and liability $2mill 
$500 deduct. $2253
$1000 deduct. $2034
$2000 deduct. $1915
$5000 deduct. $1690

I sure am paying a lot more than Rikk and Howard. May I ask who your providers are? 

For comparison's sake, my house is on an acreage. I remember when I first signed up that, they dinged me for not being close to a fire hydrant but I'm not sure how much that affects my quote. Other than that, it is a pretty standard house.

boots


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## sprocket1200 (Aug 21, 2009)

CAA is the problem, they were at least double our quote and we have been members for years.

our $2,500 deductible from canadian direct is $74 a month ($888). give them a call.


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## Syph007 (May 2, 2011)

I'm with TD bank for insurance, purely because we get a group rate through my employer. Our house insurance is 56 a month. 

I know the feeling of irritation paying for something that seems pointless. My parents cancelled their house insurance. My dad never leaves the house hardly and they live in a very small town where their house is only valued at 35k anyhow. Ya its a risk, but very small one.


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## Cal (Jun 17, 2009)

Time to start checking prices from other companies...


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## OhGreatGuru (May 24, 2009)

Syph007 said:


> ... My parents cancelled their house insurance. My dad never leaves the house hardly and they live in a very small town where their house is only valued at 35k anyhow. Ya its a risk, but very small one.


1. Hard to believe that any house can be replaced for 35 K nowadays, unless it is a trailer. Is 35K a market value, or are your parents in a province where property assessments are still a fraction of market value?;
2. If replacement value really is low, premium will also be correspondingly lower;
3. You still need liability insurance regardless of the value of the home.
4. "never leaves the house" doesn't make it lower risk, since most fires are caused by people, and occupancy doesn't prevent storm damage.


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