Author Topic: Homeowner's Insurance...a must?  (Read 2504 times)

FuckRx

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Homeowner's Insurance...a must?
« on: August 23, 2013, 09:27:15 AM »

I searched on the topic here...
was wondering whether for a condo with an HOA a homeowner's insurance policy is necessary?...
i would be able to do most repairs myself...
i would have cash reserve for up to 15,000 in damage....

Louisville

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Re: Homeowner's Insurance...a must?
« Reply #1 on: August 23, 2013, 09:59:32 AM »
What if it burned to the ground?

CB

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Re: Homeowner's Insurance...a must?
« Reply #2 on: August 23, 2013, 10:08:37 AM »
You will need to look carefully at the policy the condo HOA carries.  I think most just cover "from the studs outward" meaning that anything that happens from the sheetrock in is on you.  If you can't self-insure (e.g., if you can't afford to gut the interior and replace everything in the event of a disastrous incident) you might want to look for insurance on fixtures, contents, etc.

Another Reader

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Re: Homeowner's Insurance...a must?
« Reply #3 on: August 23, 2013, 10:27:57 AM »
An insurance agent will review the condo policy for you to determine what the HOA covers and what you are responsible for.  Your lender will require you to carry the insurance for whatever the HOA does not.  Personal property coverage will likely not be required, but is usually included in most condo policies.

HumanCalculator

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Re: Homeowner's Insurance...a must?
« Reply #4 on: August 23, 2013, 10:47:55 AM »
Don't forget liability, you could be on the hook for multi-million dollars settlement is there is no "can't sue between owners" clause in the HOA.

Kazimieras

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Re: Homeowner's Insurance...a must?
« Reply #5 on: August 23, 2013, 12:25:39 PM »
Insurance is worthless until you need it.

Statistically you are likely better off without it. This is a simple conclusion since if the insurers were not making money off the insurance, they would not offer it. But like another person said, if you can't self insure the entire thing yourself... well buyer beware.

fiveoclockshadow

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Re: Homeowner's Insurance...a must?
« Reply #6 on: August 23, 2013, 02:38:32 PM »
Insurance is worthless until you need it.

Exactly.

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Statistically you are likely better off without it. This is a simple conclusion since if the insurers were not making money off the insurance, they would not offer it.

Which is only relevant if you happen to have a reset button on your life you can press multiple times ;)  The assumption that just because someone makes money off something that it isn't in your interest to purchase it is not sound.  Pooling and diversifying risk costs money.  Now, whether you are being charged a fair price is another question...

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But like another person said, if you can't self insure the entire thing yourself... well buyer beware.

Yep.  The standard advice here is self insure up to the level you can and then buy insurance for catastrophes.  Catastrophic insurance (high deductible) is inexpensive and is also the range in which insurance companies are actually bringing value to the table (by pooling risk).   Low deductible insurance begins to blend into a service plan which is both expensive and of no real value to the consumer while high profit to the insurance company.

As others pointed out you certainly don't want to pay for insurance you don't need (i.e. parts the HOA covers) so make sure your insurer proper aligns your coverage.

You will find that even savvy investors can be surprisingly irrational and dumb when it comes to insurance.  Most people simultaneously over insure some risks and drastically under insure other risks.  Insurance deals with fear and so it is a natural part of personal finance to get irrational.  It is silly to build up a stash with sound investments but be penny foolish when insuring against outsized risks (e.g. liability, disability).  And it is also silly to pay to insure things that don't need it (e.g. extended warranties).

dragoncar

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Re: Homeowner's Insurance...a must?
« Reply #7 on: August 23, 2013, 03:46:42 PM »
If you have a mortgage, the bank likely requires it.

You definitely want liability.

The cost should be very low -- as much as renters insurance since liability is the biggest part (I think you can choose very low coverage for interior replacement... A few thousand  and self insure that part).