When do you cancel home insurance?

[Dee_the_third]

We bought the home for 45k, it's probably worth 70k if we were to list it. Mortgage paid off two years ago. Homeowner's insurance is 1,332 a year.

No debt, our stock/bond assets are about 10x the house and our annual pre-tax income is about 2x the house value. Planning to sell the house next year. We can cancel the insurance right?

[Sibley]

If you cancel the insurance, and then something happens, are you ok with a total loss? Are you ok paying out of pocket for repairs or demolition?

There's also legal liability to consider, you may be able to fall back on your insurance company to help if you get sued. Are you ok with not having that backup/assistance?

Basically, are you willing to do everything your insurance company currently does?


If the answers are no, then don't cancel the insurance.

[Sandi_k]

Never. You insure for things that you cannot easily recover from, so I will always have home insurance. I don't want my retirement to go up in smoke should the house catch fire. I have a friend who had exactly that happen, in Paradise, CA.

No thank you.

[Dee_the_third]

Right, but in this specific context the numbers matter. We can afford the replacement cost of the house with half a year of paychecks. Is the cost to benefit ratio worth it?

[RWD]

It would be 53 years before you would save enough from not paying insurance to cover a total loss. Doesn't seem like a great bet. Also, can you shop around for cheaper insurance or raise the deductible on your current insurance? You're paying the same amount for insurance that we are on a house worth ~10X yours.

[snic]

Does the insurance cover liability, and are you Ok with losing that coverage?

[AccidentialMustache]

I wouldn't want to lose liability (or umbrella) even if we owned our home outright (and we did own our previous one outright for a few years before we moved).

What I will say is $1.3k for a house worth $70k sounds like a rip-off and you should shop around. I'm paying $1.6k a year for a house worth many times that (but not 10x). Now that's USAA so it is hard to beat, but still your price straight up multiplied to my house would be daft.

[GilesMM]

If you don’t drive, rent your house out, have a boat or ATV, trampoline or vicious dog.you may be ok not having liability insurance. Otherwise, keep it.

[nereo]

Right, but in this specific context the numbers matter. We can afford the replacement cost of the house with half a year of paychecks. Is the cost to benefit ratio worth it?

As others have pointed out, home owners insurance is covering far more than the structure, and in the case of a major claim the liability could be far greater than your rebuild cost for the structure.

In your situation I would personally not go without coverage, though I would shop around and ask what premiums would be if I raised the deductibles to $5k, or even higher.

What are you levels of coverage now?

[Freedomin5]

Does your insurance include liability insurance? If someone slips and falls on the walkway leading to your front door and sues you for a million dollars, would you be able to cover it out of your own pocket? I don’t know all the specifics of your situation, but you need to be careful that you’re not being penny-wise but pound-foolish.

[Metalcat]

Have you also accounted for the value of everything inside the house?

As others have said, it's really the liability that matters. If your house burns down, what's your liability if your neighbour's kid suffers severe smoke inhalation? What if damage to your house somehow damages the community water lines?

What are the many, many lines of liability you could have as owners of that property?

Do you have a reasonable way to insure against those liabilities with other insurance products? Do they have more exclusions?

If you need insurance, which you do for liability, I would be inclined to purchase the product that I can be certain will cover my ass when I need it.

For example, I pay a stupid premium for flood insurance. Where I own my condo has had massive floods in recent years and flood insurance has sky-rocketed. I live near the top of a highrise, if I'm flooded, the world is ending.

However, I have flood insurance because without it, I have zero water damage coverage. Which is fine for *my* unit, but not for my liability for the unit below me. So if something happens in my unit that damages my downstairs neighbour's priceless wine collection, I'm personally liable for that value.

Even more extreme, what if a chunk of their ceiling fell on their infant?

It's stupid, but that's the game. I have to pay a premium for everyone else's river flood risk because I live near a river, but without paying that premium, I'm open to an unknown level of liability. And I can't get another product to cover my liability sufficiently to my level of comfort to replace the stupid flood policy.

As my lawyer put it: if there is any scenario where harm could come to a child and you could be found liable, buy the correct insurance policy and just pay for it.

[reeshau]

Planning to sell the house next year. We can cancel the insurance right?

I get the impression that this fact may be why you thought this up in the first place.  Rather, I think this makes the case worse.  If this was your forever home, you could hypothetically save up all those foregone insurance premiums to create your own "total loss sinking fund."

But rather, your maximum benefit from this maneuver is one year's premium--$1,332.  But your potential loss is the same, although with only one year's chance.

With that large a stash, you could get several hundred dollars for moving your IRA.  Or, look at accounts with better interest rates.  I can think of several small moves, each worth several hundred dollars and with zero risk, that get you to the same place.  Betting 1/10th (or more) of your stash on chump change doesn't seem like a long-term smart approach.   Even if that amount seems a waste, or is unfair.

Then again, what are your deductibles?  You could scale the insurance back or shop it around, if it really bugs you.  With a lot less risk.

This seems like the kind of situation best addressed as "lesson learned" and prevented the next time.

[merula]

I've worked in Property & Casualty insurance for 17 years. Never go without liability coverage. If I even realize my dream of going car-free, I will still buy non-owned auto liability coverage, and I will always have personal liability coverage regardless of property ownership status.

Here are some things you might be liable for: injury to a pedestrian from failure to repair your walkway (or snow/ice removal, which is far more common in the places that get that), property damage to your neighbor's house from failing to care for a tree, overserving someone alcohol if they then injure someone else, property damage to your neighbor's house from a fire that starts on your property, injury to a guest who falls down your stairs, injury to a contractor or other person working at your house, kids sneaking onto your property to play and getting injured.

These claims can be insanely expensive. You'd be lucky to get out of any of them for six figures.

Here's what I'd suggest you do:
-Call an independent insurance agent; that is, one who represents a lot of different insurance carriers rather than just one (State Farm, Farmers and AllState are all examples of captive agents. They're good companies, but the agents can't do comparison shopping for you the way that independent agents do.)
-Tell them you're looking for as high of a property deductible as possible; this is the interim step between regular coverage and self-insuring. You'll still have liability coverage, and some property coverage for a catastrophe but you'll be responsible for claims under your deductible.
-Ask about discounts for paying in full or auto-pay.


This is just an aside, @Metalcat, but generally there's no connection between property extensions and the liability coverage. If your dishwasher floods and damages your neighbor's property, I would generally expect that to be covered on a homeowners liability coverage without a flood extension. Now,  there's an insane amount of state variability on Personal Insurance, and it sounds like you had your lawyer take a look, but it's also true that insurance law can be very different from other specialties. I would read your policy and look for a flood exclusion on the liability portion.

[Metalcat]

I've worked in Property & Casualty insurance for 17 years. Never go without liability coverage. If I even realize my dream of going car-free, I will still buy non-owned auto liability coverage, and I will always have personal liability coverage regardless of property ownership status.

Here are some things you might be liable for: injury to a pedestrian from failure to repair your walkway (or snow/ice removal, which is far more common in the places that get that), property damage to your neighbor's house from failing to care for a tree, overserving someone alcohol if they then injure someone else, property damage to your neighbor's house from a fire that starts on your property, injury to a guest who falls down your stairs, injury to a contractor or other person working at your house, kids sneaking onto your property to play and getting injured.

These claims can be insanely expensive. You'd be lucky to get out of any of them for six figures.

Here's what I'd suggest you do:
-Call an independent insurance agent; that is, one who represents a lot of different insurance carriers rather than just one (State Farm, Farmers and AllState are all examples of captive agents. They're good companies, but the agents can't do comparison shopping for you the way that independent agents do.)
-Tell them you're looking for as high of a property deductible as possible; this is the interim step between regular coverage and self-insuring. You'll still have liability coverage, and some property coverage for a catastrophe but you'll be responsible for claims under your deductible.
-Ask about discounts for paying in full or auto-pay.


This is just an aside, @Metalcat, but generally there's no connection between property extensions and the liability coverage. If your dishwasher floods and damages your neighbor's property, I would generally expect that to be covered on a homeowners liability coverage without a flood extension. Now,  there's an insane amount of state variability on Personal Insurance, and it sounds like you had your lawyer take a look, but it's also true that insurance law can be very different from other specialties. I would read your policy and look for a flood exclusion on the liability portion.

I did, and it's definitely excluded. I worked for an insurance broker and had their lawyer look over my policy to make sure that's what it says.

In the end, I get a significant insurance discount through my professional organization, so the premium for food insurance is minor compared to my global discount on multiple properties.

But my point is that it's not as easy as "just get an umbrella policy" which is what a lot of people suggest for covering liability.

You're 100% right, insurance law is extremely tricky and if someone chooses to forego the usual insurance product, they can easily leave major gaps in their liability coverage by trying to MacGyver cheaper workarounds with piecemeal policies that weren't designed for those purposes.

[ChpBstrd]

Yea, I'd be tempted to drop the coverage on that. I'm not sure I would, but I would be tempted.

What's your deductable? If it's $10k like mine, the odds are slim in any particular year that something happens which costs more than $10k+$1,332=$11,332 AND is potentially covered by insurance* AND is actually paid out by insurance without a big expensive legal fight**. Oh, and also when you make a homeowners' insurance claim, your rates go up for years afterward, so they basically take the cash back out of you.

Presumably in the event of a tornado or fire, you could buy a similar house for $70k cash and replace your things for $30k? One way to frame it is whether it makes sense to risk $100k for a 1.33% return per year. However that framing ignores the risk that the insurance company doesn't pay, or creates all sorts of obstacles and delays. I would estimate the risk of underpayment at about 50% and refusal to pay at about 10%. 

* I've never filed a claim in 21 years of home ownership, but have had multiple non-covered five-figure expenses such as wood rot, worn-out HVAC units, and roofs.

** See the experience of hurricane victims in Florida, many of whom were denied new roofs by their insurance companies, which forced them into a dilemma of whether to spend their remaining money fixing it themselves and reduce further damage or to fight the insurance companies in court. According to one source, up to 20% of claims were never paid out. These were probably people without the resources to fight the insurance companies in court.

[Dicey]

Ever hear the expression, "Penny wise, pound foolish"?

[Askel]

I'm of the opinion you only buy insurance to cover losses you can't afford to take or when legally required to do so (*). 

Was recently in an almost similar situation. Paid off house I bought for $53k in Podunk, Midwest. Except one major difference- my premium was $123/year.  So definitely shop around some on that. 

It sounds like you've done the cost/risk/benefit analysis in your head and are comfortable with that.   

If you need liability insurance, get liability insurance. I'm sure trying to get your homeowners policy to cover losses from a liability incident is about as much fun as trying to get your credit card insurance to cover a rental car loss.   

(*) I always buy all the overpriced insurance on rental vehicles.   

[Dee_the_third]

Ever hear the expression, "Penny wise, pound foolish"?

Lol, non-snarky thanks, Dicey. You get the succinct-ness award.

--

Thanks to all for the excellent advice! And thanks especially to @merula. I was only thinking about the asset protection element of it, not the liability.

I confess I don't really understand insurance, I called in and went through the coverages with an agent. Apparently the state of IL has certain minimum requirements on property coverage and I'm mostly at those limits already. But, after a little bit of back and forth I got a quote for $300/year cheaper with a different underwriter with HIGHER coverage, including 300k of personal liability.

So I'm still confused, but I saved about $300, which is good I guess?

[reeshau]

So I'm still confused, but I saved about $300, which is good I guess?

Bank insurance company makes error in your favor.  Take the win!

[ChpBstrd]

So I'm still confused, but I saved about $300, which is good I guess?

$300 seems to be the going intro rate for changing companies. I shop every 3 years and save $300/year each time. Then the rate slowly creeps back up and I get a letter about how awful it is that construction costs and fraud and disaster keep increasing every year, and we'll have to raise you 10%...blah blah. So I go shopping again to get the next intro rate.

I can't imagine the people who stick with the same company for 7-10 years. The cumulative effects of rate increases would eat them alive.

[JAYSLOL]

Cancel it if it’s 4% or less of your net worth, or less than 1/4 of your net worth, and your take home income after basic living expenses could cover it in one year or less.  Or somewhere in between those, which it sounds like you might be.  Other than that, suck it up and keep it insured so it doesn’t derail your life if it burned to the ground. 

[AccidentialMustache]

I can't imagine the people who stick with the same company for 7-10 years. The cumulative effects of rate increases would eat them alive.

That's for-profit for you.

I noted upthread I pay 1.6k a year for my current house. For my first house, back in 2005, I was paying $742. Inflation would take that to 1.15k. But I have higher coverage on the new house (worth more than twice what the old one was when we bought it).

I know not everyone has access to USAA, but I have to assume that they're not the only one?

[merula]

So I'm still confused, but I saved about $300, which is good I guess?

$300 seems to be the going intro rate for changing companies. I shop every 3 years and save $300/year each time. Then the rate slowly creeps back up and I get a letter about how awful it is that construction costs and fraud and disaster keep increasing every year, and we'll have to raise you 10%...blah blah. So I go shopping again to get the next intro rate.

I can't imagine the people who stick with the same company for 7-10 years. The cumulative effects of rate increases would eat them alive.

I could write paragraphs on this, but I don't think anyone cares enough. Bottom line, you can usually get a better deal by shopping every couple of years because of how personal insurance is regulated by individual states, but it's highly dependent on the state in question AND on your individual circumstances. Having access to USAA is one that's already been mentioned in this thread, but my circumstance is another: I've had a special auto rate for 15+ years through a company that offered a mileage-based tiering system. It's only available through independent agents and that savings beats anyone else.

This is why I can't speak highly enough about independent agents. You just ask them to shop around every so often and they'll do it, and if you're not happy with those options you can call a different one and they'll look into other options.

None of this applies in FL or CA, which is part of the reason that I get irrationally irked by questions like "Is paying X for homeowners insurance too much?". Insurance is regulated on a state-by-state basis; coverage can be compulsory in one state and more or less banned in another. PLUS, hazards vary widely by state and even by ZIP (wind/hail/fire/theft, which isn't even getting into specialty coverages like flood/quake/sewer backup), and homeowners insurance is rated on property values. X might be perfectly reasonable for a $300k SFH in SC, or a $1m condo in NY, or a $50k trailer in FL, and then way too much for a $150k SFH in NV and way too little for anything in CA.

[iris lily]

Right, but in this specific context the numbers matter. We can afford the replacement cost of the house with half a year of paychecks. Is the cost to benefit ratio worth it?

As long as you have liability coverage, I think it’s fine.

We owned a little extra house that we basically bought for garden space. We had “liability only” coverage on it.

[honeybbq]

If someone falls on your sidewalk and sues you for millions, are you ok doing it alone?

[Dee_the_third]

If someone falls on your sidewalk and sues you for millions, are you ok doing it alone?

I was always under the impression that this scenario was apocryphal. The city owns the sidewalk anyways 🤔

[Askel]

So my old hobby was organizing motorsports events where there was always a significant risk of death or serious injury on my watch.  (Had some rare incidents of the latter, but thank god never the former). Sounds like it'd be lawsuit central, right? 

Inevitably, I'd hear all kinds of anecdotal and apocryphal stories about people getting sued for millions of dollars for all kinds of reasons and certain things not being allowed anymore because one time somebody sued somebody. 

Pretty much none of them were true. 

Some at least had some basis in fact and reading the court cases proved interesting, but no where near as simple as the story teller would make them out to be. 

So I'd love to read the ACTUAL court documents about innocent Joe Homeowner who got sued into oblivion because Suity McLawsuitface slipped on his sidewalk.   

[Metalcat]

So my old hobby was organizing motorsports events where there was always a significant risk of death or serious injury on my watch.  (Had some rare incidents of the latter, but thank god never the former). Sounds like it'd be lawsuit central, right? 

Inevitably, I'd hear all kinds of anecdotal and apocryphal stories about people getting sued for millions of dollars for all kinds of reasons and certain things not being allowed anymore because one time somebody sued somebody. 

Pretty much none of them were true. 

Some at least had some basis in fact and reading the court cases proved interesting, but no where near as simple as the story teller would make them out to be. 

So I'd love to read the ACTUAL court documents about innocent Joe Homeowner who got sued into oblivion because Suity McLawsuitface slipped on his sidewalk.

So your point is that since really bad things don't happen and people rarely sue, it's a good idea not to have insurance?

I mean, sure, each person needs to assess their own risk tolerance. But as someone who used to run a large highrise, I can tell you that bad shit does happen and people do sue.

I was actually house-sitting a condo years ago when a resident killed himself because he ended up screwing something up and taking off to India for months and was held personally liable for hundreds of thousands in damage to a neighbour's wine collection that got soaked in sewage.

I'm sure he had other issues, but I'll never forget the guy screaming and sobbing outside of this condo where I was pet sitting.

It was bad.

Plus I was stuck in a condo with one floor filled with sewage, so there was that too.

[ChickenStash]

So my old hobby was organizing motorsports events where there was always a significant risk of death or serious injury on my watch.  (Had some rare incidents of the latter, but thank god never the former). Sounds like it'd be lawsuit central, right? 

Inevitably, I'd hear all kinds of anecdotal and apocryphal stories about people getting sued for millions of dollars for all kinds of reasons and certain things not being allowed anymore because one time somebody sued somebody. 

Pretty much none of them were true. 

Some at least had some basis in fact and reading the court cases proved interesting, but no where near as simple as the story teller would make them out to be. 

So I'd love to read the ACTUAL court documents about innocent Joe Homeowner who got sued into oblivion because Suity McLawsuitface slipped on his sidewalk.

This one is about a condo manager but fairly close otherwise - actually made it to the IL Supreme Court which seems interesting for a slip/fall case. https://caselaw.findlaw.com/court/il-supreme-court/1756410.html

It's all about the details. In this case the court found that the property/condo manager firm's negligence lead to the injuries.

[Askel]

This one is about a condo manager but fairly close otherwise - actually made it to the IL Supreme Court which seems interesting for a slip/fall case. https://caselaw.findlaw.com/court/il-supreme-court/1756410.html

It's all about the details. In this case the court found that the property/condo manager firm's negligence lead to the injuries.

Interesting reading, thanks.  And as you noted, the devil is usually hiding out in those dang details which tend to get glossed over by rando internet stories.   

But they key thing there is negligence. If I've learned one thing in all my training and dealing with insurance/legal folks from that motorsport career, it's that being found negligent is the kiss of death. And if you're going to be negligent, read that homeowner policy real carefully- your coverage in the event of varying degrees of negligence may be limited or non-existent.

[Dicey]

If someone falls on your sidewalk and sues you for millions, are you ok doing it alone?

I was always under the impression that this scenario was apocryphal. The city owns the sidewalk anyways 🤔

Not in my city.

[GilesMM]

So my old hobby was organizing motorsports events where there was always a significant risk of death or serious injury on my watch.  (Had some rare incidents of the latter, but thank god never the former). Sounds like it'd be lawsuit central, right? 

Inevitably, I'd hear all kinds of anecdotal and apocryphal stories about people getting sued for millions of dollars for all kinds of reasons and certain things not being allowed anymore because one time somebody sued somebody. 

Pretty much none of them were true. 

Some at least had some basis in fact and reading the court cases proved interesting, but no where near as simple as the story teller would make them out to be. 

So I'd love to read the ACTUAL court documents about innocent Joe Homeowner who got sued into oblivion because Suity McLawsuitface slipped on his sidewalk.

This one is about a condo manager but fairly close otherwise - actually made it to the IL Supreme Court which seems interesting for a slip/fall case. https://caselaw.findlaw.com/court/il-supreme-court/1756410.html

It's all about the details. In this case the court found that the property/condo manager firm's negligence lead to the injuries.

 


Sort of, they said the case could go forward.  I'm not sure what happened after that.

[JAYSLOL]

If someone falls on your sidewalk and sues you for millions, are you ok doing it alone?

I was always under the impression that this scenario was apocryphal. The city owns the sidewalk anyways 🤔

Not in my city.

Where I am, city usually owns the sidewalks, but often the homeowners are responsible to keep them clear.  Especially if it snows, it’s something I’d be careful to keep cleared well for liability reasons

[ender]

I can't imagine the people who stick with the same company for 7-10 years. The cumulative effects of rate increases would eat them alive.

That's for-profit for you.

I noted upthread I pay 1.6k a year for my current house. For my first house, back in 2005, I was paying $742. Inflation would take that to 1.15k. But I have higher coverage on the new house (worth more than twice what the old one was when we bought it).

I know not everyone has access to USAA, but I have to assume that they're not the only one?

USAA is absurdly expensive for us now. I'd love to go back to them, but they are just not price competitive in my area.

[iluvzbeach]

If someone falls on your sidewalk and sues you for millions, are you ok doing it alone?

I was always under the impression that this scenario was apocryphal. The city owns the sidewalk anyways 🤔

Not in my city.

Not in my city either. The sidewalks are on an easement that you must allow others to walk on/thru, but the upkeep (and ultimately the liability) is the responsibility of the property owner.

[ChpBstrd]

If someone falls on your sidewalk and sues you for millions, are you ok doing it alone?

I was always under the impression that this scenario was apocryphal. The city owns the sidewalk anyways 🤔

Not in my city.

Not in my city either. The sidewalks are on an easement that you must allow others to walk on/thru, but the upkeep (and ultimately the liability) is the responsibility of the property owner.

So are 80 year old grandmas getting sued or fined the day after each snow? I mean, maybe it's a social expectation or courtesy, but I can't imagine such things being required under penalty of liability.

[reeshau]

If someone falls on your sidewalk and sues you for millions, are you ok doing it alone?

I was always under the impression that this scenario was apocryphal. The city owns the sidewalk anyways 🤔

Not in my city.

Not in my city either. The sidewalks are on an easement that you must allow others to walk on/thru, but the upkeep (and ultimately the liability) is the responsibility of the property owner.

So are 80 year old grandmas getting sued or fined the day after each snow? I mean, maybe it's a social expectation or courtesy, but I can't imagine such things being required under penalty of liability.

Yes.  And in Ann Arbor, they can be fined by the city, too.

https://www.a2gov.org/departments/police/units/Pages/Snow-and-Ice-Removal-on-Sidewalks.aspx

[ChickenStash]

If someone falls on your sidewalk and sues you for millions, are you ok doing it alone?

I was always under the impression that this scenario was apocryphal. The city owns the sidewalk anyways 🤔

Not in my city.

Not in my city either. The sidewalks are on an easement that you must allow others to walk on/thru, but the upkeep (and ultimately the liability) is the responsibility of the property owner.

So are 80 year old grandmas getting sued or fined the day after each snow? I mean, maybe it's a social expectation or courtesy, but I can't imagine such things being required under penalty of liability.

Yes.  And in Ann Arbor, they can be fined by the city, too.

https://www.a2gov.org/departments/police/units/Pages/Snow-and-Ice-Removal-on-Sidewalks.aspx

+1 here.

Snow is expected to be removed by 12 hours after the storm ends. If there is a complaint and the snow isn't cleared after a notice by the city, the city will remove it for $2/lineal foot of sidewalk and $25 per curb ramp plus up to $50 admin fee depending on how many times it's happened that season, charged to the property owner.

[EvenSteven]

So my old hobby was organizing motorsports events where there was always a significant risk of death or serious injury on my watch.  (Had some rare incidents of the latter, but thank god never the former). Sounds like it'd be lawsuit central, right? 

Inevitably, I'd hear all kinds of anecdotal and apocryphal stories about people getting sued for millions of dollars for all kinds of reasons and certain things not being allowed anymore because one time somebody sued somebody. 

Pretty much none of them were true. 

Some at least had some basis in fact and reading the court cases proved interesting, but no where near as simple as the story teller would make them out to be. 

So I'd love to read the ACTUAL court documents about innocent Joe Homeowner who got sued into oblivion because Suity McLawsuitface slipped on his sidewalk.

So your point is that since really bad things don't happen and people rarely sue, it's a good idea not to have insurance?

I mean, sure, each person needs to assess their own risk tolerance. But as someone who used to run a large highrise, I can tell you that bad shit does happen and people do sue.

I was actually house-sitting a condo years ago when a resident killed himself because he ended up screwing something up and taking off to India for months and was held personally liable for hundreds of thousands in damage to a neighbour's wine collection that got soaked in sewage.

I'm sure he had other issues, but I'll never forget the guy screaming and sobbing outside of this condo where I was pet sitting.

It was bad.

Plus I was stuck in a condo with one floor filled with sewage, so there was that too.

The point I received from that post was that personal lawsuits covered by homeowners insurance are less frequent than one might be lead to believe from reading personal finance forums. And this frequency informs how much one should pay (if anything at all) for insurance.

[GilesMM]

So my old hobby was organizing motorsports events where there was always a significant risk of death or serious injury on my watch.  (Had some rare incidents of the latter, but thank god never the former). Sounds like it'd be lawsuit central, right? 

Inevitably, I'd hear all kinds of anecdotal and apocryphal stories about people getting sued for millions of dollars for all kinds of reasons and certain things not being allowed anymore because one time somebody sued somebody. 

Pretty much none of them were true. 

Some at least had some basis in fact and reading the court cases proved interesting, but no where near as simple as the story teller would make them out to be. 

So I'd love to read the ACTUAL court documents about innocent Joe Homeowner who got sued into oblivion because Suity McLawsuitface slipped on his sidewalk.

So your point is that since really bad things don't happen and people rarely sue, it's a good idea not to have insurance?

I mean, sure, each person needs to assess their own risk tolerance. But as someone who used to run a large highrise, I can tell you that bad shit does happen and people do sue.

I was actually house-sitting a condo years ago when a resident killed himself because he ended up screwing something up and taking off to India for months and was held personally liable for hundreds of thousands in damage to a neighbour's wine collection that got soaked in sewage.

I'm sure he had other issues, but I'll never forget the guy screaming and sobbing outside of this condo where I was pet sitting.

It was bad.

Plus I was stuck in a condo with one floor filled with sewage, so there was that too.

The point I received from that post was that personal lawsuits covered by homeowners insurance are less frequent than one might be lead to believe from reading personal finance forums. And this frequency informs how much one should pay (if anything at all) for insurance.

One does not insure against things that are routine but rather against black swans.  The frequency or probability of occurrence will simply be reflected in the policy cost as the insurer knows the actuarial figures very well. This is why umbrella insurance is so cheap - your chance of using it is infinitesimal.  You still need it as you don't want to risk a chance of losing most of your net worth even if the chance is tiny.

[ChpBstrd]

So my old hobby was organizing motorsports events where there was always a significant risk of death or serious injury on my watch.  (Had some rare incidents of the latter, but thank god never the former). Sounds like it'd be lawsuit central, right? 

Inevitably, I'd hear all kinds of anecdotal and apocryphal stories about people getting sued for millions of dollars for all kinds of reasons and certain things not being allowed anymore because one time somebody sued somebody. 

Pretty much none of them were true. 

Some at least had some basis in fact and reading the court cases proved interesting, but no where near as simple as the story teller would make them out to be. 

So I'd love to read the ACTUAL court documents about innocent Joe Homeowner who got sued into oblivion because Suity McLawsuitface slipped on his sidewalk.

So your point is that since really bad things don't happen and people rarely sue, it's a good idea not to have insurance?

I mean, sure, each person needs to assess their own risk tolerance. But as someone who used to run a large highrise, I can tell you that bad shit does happen and people do sue.

I was actually house-sitting a condo years ago when a resident killed himself because he ended up screwing something up and taking off to India for months and was held personally liable for hundreds of thousands in damage to a neighbour's wine collection that got soaked in sewage.

I'm sure he had other issues, but I'll never forget the guy screaming and sobbing outside of this condo where I was pet sitting.

It was bad.

Plus I was stuck in a condo with one floor filled with sewage, so there was that too.

The point I received from that post was that personal lawsuits covered by homeowners insurance are less frequent than one might be lead to believe from reading personal finance forums. And this frequency informs how much one should pay (if anything at all) for insurance.

One does not insure against things that are routine but rather against black swans.  The frequency or probability of occurrence will simply be reflected in the policy cost as the insurer knows the actuarial figures very well. This is why umbrella insurance is so cheap - your chance of using it is infinitesimal.  You still need it as you don't want to risk a chance of losing most of your net worth even if the chance is tiny.

As I understand it, not owning a dog reduces your lawsuit risk by a lot.

[Metalcat]

I think perhaps because I worked in healthcare I have a very, very different perception of how tangible the risk of accidents is.

After you see enough people walk in with parts of themselves in a bag, you stop feeling reassured that these things are "unlikely events."

[EvenSteven]

I think perhaps because I worked in healthcare I have a very, very different perception of how tangible the risk of accidents is.

After you see enough people walk in with parts of themselves in a bag, you stop feeling reassured that these things are "unlikely events."

I wonder if there is any publicly available data out there that shows the likelihood of injury, and what percentage of those result in a successful lawsuit, and how many of those are covered by homeowners insurance.

[merula]

Yes, these things happen. I read about a new one about once a day on average in the course of my job. Every single thing I put into my first post in this thread is a simplification of a real situation that I really read the claim notes or suit docs on. To Metalcat's point, they are rare in the sense that they are unlikely to happen to you, personally, but they happen everyday to *SOMEONE*.

But they key thing there is negligence. If I've learned one thing in all my training and dealing with insurance/legal folks from that motorsport career, it's that being found negligent is the kiss of death. And if you're going to be negligent, read that homeowner policy real carefully- your coverage in the event of varying degrees of negligence may be limited or non-existent.

You're right in that being negligent is more likely to lead to lawsuits than not, but homeowners liability policies cover negligence. That's actually kind of their entire point. In order to have liability, you must (1) have a duty of care, (2) breach that duty, and (3) have such breach cause damages.

BUT here's a fun new theory of negligence: Negligent Security. This states that the property owner owes a duty to provide a secure premises to anyone on their property, or around the property in the case of negligent lighting, and if there is a shooting, robbery or car accident can be proven to be caused by that negligent security, the property owner can be liable. The list at the end of this article is a fun read. https://www.lawsuit-information-center.com/negligent-security-lawsuits.html

[ChpBstrd]

So to summarize the above comments... we must buy insurance because we live in a weird, illogical culture.

[Just Joe]

So I'm still confused, but I saved about $300, which is good I guess?

$300 seems to be the going intro rate for changing companies. I shop every 3 years and save $300/year each time. Then the rate slowly creeps back up and I get a letter about how awful it is that construction costs and fraud and disaster keep increasing every year, and we'll have to raise you 10%...blah blah. So I go shopping again to get the next intro rate.

I can't imagine the people who stick with the same company for 7-10 years. The cumulative effects of rate increases would eat them alive.

I'm not so sure about that. We've been with State Farm since the turn of the century. Our rates seem quite in line with other insurers last time I checked. I saw that slight discount if I changed insurers but knew it might just be an introductory rate.

Rather than cost increases year after year, we've gotten some discounts thrown our way. We've never filed a claim with them. I'm eligible for USAA but the cost was higher. I have a couple relatives who claim SF is the highest cost insurer out there. Perhaps SF is expensive in their ZIP code and with their claim history (if there is one). 

I'm not sure I want to chase the last dollar on this particular topic. We're saving alot of money in other ways.

[Metalcat]

So to summarize the above comments... we must buy insurance because we live in a weird, illogical culture.

Well yeah...hasn't that been clear all along, lol?

[ChpBstrd]

So to summarize the above comments... we must buy insurance because we live in a weird, illogical culture.

Well yeah...hasn't that been clear all along, lol?

Lol, yea, just pointing out we started talking about house fires and replacement costs and ended up talking about being sued for snow shoveling and sidewalk cracks.

We've been with State Farm since the turn of the century. Our rates seem quite in line with other insurers last time I checked. I saw that slight discount if I changed insurers but knew it might just be an introductory rate.

Another way to look at it: You can pay $300/year less for insurance every year if you're willing to do the work to change insurers and get the intro rate every year. I am lazy and only do it ever 3-4 years.

[badger1988]

Read this thread with interest, as I'm one who chooses to self-insure my house. Lots of good points made; I'm still comfortable with the risks/likelihood of occurrence.