I've read some articles, and it's commonly written that you should keep your home insurance, even if you pay off your mortgage. But the 'experts' have been wrong on a lot of things recently. I wanted to run this by you guys.

I'm paying $460/month in home insurance, mandated by my mortgage company. That's $5520/year I could be investing. 10 years of savings, at 5% interest, could be worth $112,000. We have money invested where the family could buy a smaller home if the peanut butter hit the fan.

I've shopped it around, and $460/month is pretty normal for my size of house.

Would it be a good idea to cancel home insurance and keep the savings?

3rd and 2 said:

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Would it be a good idea to cancel home insurance and keep the savings?

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This boils down to your tolerance for risk. Insurance is about spreading those risks across multiple parties. If your house burns, are you financially prepared to rebuild? Of course, if you never need a claim, then the premiums seem excessive.

Like you, I'd be interested in responses from those who do not carry insurance on their house. What was the deciding factor to go without?

At the end of the day, it's 100% risk tolerance like stated above.

But.....where are you located? $5,500/year seems pretty excessive for home insurance. If that's truly what coverage is, I feel like $100k wouldn't be a drop in the bucket of what it would take to rebuild.

Other options is somewhere in the middle. Keep insurance but increase deductibles, decrease personal property coverage, etc.

My house is paid off and I cancelled my Windstorm insurance after

I keep liability, fire, and theft as it is pretty cheap

Windstorm was like $7k per year because I am in Galveston County

Insurance is meant to protect the insured against low frequency high impact events. Most people have a significant part of their wealth invested in their home, thus qualifying as a high impact event if it was substantially damaged or destroyed. In my opinion, it would be a penny wise but a pound foolish for most folks to drop insurance on their home whether it is paid off or not.

The cost of insurance on the homes I'm financing right now is crazy. I know this is a paid off home discussion but it's impacting some people being able to qualify.

I've seen too many hail storms, house fires, wildfires, and tornadoes. I can see reducing your coverage and increasing your deductible to get a much lower rate but couldn't justify cancelling it entirely.

Consider what else is covered too. There is some general liability wrapped into most homeowner's policies. What is the delta between the full policy cost and picking up that coverage on its own? What happens/who pays if the someone is injured on the property with no homeowner policy in place?

jja79 said:

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The cost of insurance on the homes I'm financing right now is crazy. I know this is a paid off home discussion but it's impacting some people being able to qualify.

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Throw in the punitive property taxes and the high interest rates - buying a home is very difficult for middle class in TX

Some of us are old enough not to think these rates are that high.

I have a lake front property where the land is worth as much as the house. I don't carry insurance on the property. I'm more worried about liability than damage to the structure, so I went with a boathouse builder who I confirmed has workman's comp.

$5520 annually for 10 years at 5% is $112,000?

Seems high.

redaszag99 said:

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My house is paid off and I cancelled my Windstorm insurance after

I keep liability, fire, and theft as it is pretty cheap

Windstorm was like $7k per year because I am in Galveston County

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What company was this with? That would probably work well on rentals. My deductible is already 5% so unless there were a bad fire, im not making a claim anyway.

Been seeing more and more of this discussion. Be interesting to see how insurance companies react if enough of their best and lowest risk customers jump ship.

3rd and 2 said:

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I've read some articles, and it's commonly written that you should keep your home insurance, even if you pay off your mortgage. But the 'experts' have been wrong on a lot of things recently. I wanted to run this by you guys.

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This is arrogance.

I really think we should have high deductible catastrophic insurance coverage that covers heavy issues only (think min 50k repair) with no hail damage to roof issues, pipe break with little sheet rock, etc. I would be willing to accept greater risk up to a cap of $30-50k. Almost a private network to get away from all these companies that can afford to fill every other commercial spot, but not lower my premiums

Win At Life said:

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I have a lake front property where the land is worth as much as the house. I don't carry insurance on the property. I'm more worried about liability than damage to the structure, so I went with a boathouse builder who I confirmed has workman's comp.

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I would get a quote on a liability policy. If one of the employees trips on your property his baby Mama's lawyer is gonna drag you into court and max out the workers comp. The workers comp company could potentially come after you as well if they think they can find you liable

SnowboardAg said:

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I really think we should have high deductible catastrophic insurance coverage that covers heavy issues only (think min 50k repair) with no hail damage to roof issues, pipe break with little sheet rock, etc. I would be willing to accept greater risk up to a cap of $30-50k. Almost a private network to get away from all these companies that can afford to fill every other commercial spot, but not lower my premiums

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I would LOVE a policy like this. I had a tree (appeared healthy, neighbors yard just across the fence) come crashing down on a crystal clear blue sky morning into my garage. This was back in 2020. By the time I was done paying deductibles and some un-covered expenses, the insurance company paid out LESS than my annual premium!

Give me a "I won't call you until the estimate is >25% the value of the property" policy!

Majority of those saying they would be ok with a policy that is for catastrophic loss only for the most part would work out if you own your house cash. If you owned your house cash you could buy fire and liability only insurance and generally the cost would be much cheaper (I am speaking of Houston area). If you remove windstorm from your policy in Houston your premium should drop 50-75%. If you have a loan though, the bank will not accept the coverage. From the banks standpoint, you have to remember they have a loan on an asset and that asset has to have enough value to sell it in case they have to take it back. While many of us have plenty of money to weather the storm.. majority of the banks mortgage customers do not have the money to repair the AC if it were to break.. much less spend $30-50k on a repair if they were not properly covered. I have thought about paying my house off and getting basic insurance as well but I have many large trees that could fall on my house. My main concern would be fire, pipe breaking upstairs, tree falling on house, and liability.

jja79 said:

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Some of us are old enough not to think these rates are that high.

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congrats - still doesn't change the math

normaleagle05 said:

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I've seen too many hail storms, house fires, wildfires, and tornadoes. I can see reducing your coverage and increasing your deductible to get a much lower rate but couldn't justify cancelling it entirely.

Consider what else is covered too. There is some general liability wrapped into most homeowner's policies. What is the delta between the full policy cost and picking up that coverage on its own? What happens/who pays if the someone is injured on the property with no homeowner policy in place?

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What lawyer is going to sue a homeowner without liability insurance? Seems they go after the insurance more than anything.

Home is paid for and in June I decided the juice wasnt worth the squeeze. Not going to lie, it would be rough to have to pay to rebuild my house but I could. These premiums have gotten ridiculous and I decided I was not going to swim in that pond anymore.

2 cliches in one post, well done

One that suspects there are assets to go after.

aggiepaintrain said:

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2 cliches in one post, well done

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in for a penny, in for a pound

Diggity said:

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aggiepaintrain said:

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2 cliches in one post, well done

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in for a penny, in for a pound

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That dog won't hunt.

I paid my Cypress home off about 6 months prior to the February'21 winter storm and decided to drop homeowners insurance at that time. The stress of not having insurance during that storm was too much for me to handle so I decided for my own peace of mind to start insuring my home again, however, I currently have very high deductibles so basically just insuring for major events.

Agreed.

Seems like there's better places to cut costs

jja79 said:

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Some of us are old enough not to think these rates are that high.

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Interest rates are only part of the equation and a lower interest rate can be more punitive than a higher interest rate dependent upon the price of the asset and the income of the people purchasing the asset. Now is probably worse than any point in your career. I don't care how old you are.

I think you're right. I was merely commenting that rates have been higher than they are now. But I get that they are higher than many of the home buying public has dealt with.

I have a lakehouse and once I pay off my mortgage, no more flood insurance. I am going to look at increasing my deductible to even 10% if that lowers my premium by 50%. I understand why its high, but it make a home that much more unaffordable.

Can one if you guys telling us to get a fire and/or liability policy only or a 10% deductible policy please provide a contact for someone who will actually write such a policy.

Goosehead worked with Homeowners of America to get me a policy at 5% / 2% deductible which is the highest they could go.

My policy had doubled from $2.1k to $4.2k. This increase in deductible max it "only" $3.2k

Feeling like I'm wasting money on insurance is one of my goals in life...I prefer it to feeling like I got my money's worth.

My advice...pick your threshold for pain/recovery, but don't completely drop it.

Sazerac said:

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Goosehead worked with Homeowners of America to get me a policy at 5% / 2% deductible which is the highest they could go.

My policy had doubled from $2.1k to $4.2k. This increase in deductible max it "only" $3.2k

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At $4,200 what was the amount you were insuring?

$800k