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Why even bother with insurance with minimal possessions and a deductible that high? Genuinely curious. If this is intended to cover property damage to the stru

Why even bother with insurance with minimal possessions and a deductible that high? Genuinely curious. If this is intended to cover property damage to the structure then I hope you have that $25k available - you're not going to get a crew in to fix/clean anything without paying that deductible (or estimated cost of repairs/cleanup) up front. My crews wouldn't have set foot in a house without authorization from the adjuster or cash in hand.

lotsofpulp 4y ago
The insurance is to satisfy the lender's requirement for lending me money to buy the house. But if I did not have a redundant house or enough money to pay for a new home, I would also want the insurance to rebuild or repair a house. It is possible to have enough cash to replace your needed belongings, but not enough cash to rebuild the house after a fire. I am fortunate to have more than $25k available for immediate concerns. But I often find people who have more than sufficient cash such that they have already insured themself to buy additional low deductible insurance. Not that there is anything wrong with that, but in the age of low cost broad market index funds, I say why not cut out the middleman.
- cactacea 4y ago
  I'm a little surprised that a policy with a deductible that high meets their requirements. Out of the many, many claims I've submitted the highest I've ever seen was $5k. Insurance is cheap enough that I question the value you're saving here but hey, you do you. My entirely unsolicited advice is that you should be aware how quick you're going to need to cough up that deductible to get anything done in case you do need to make a claim. Nobody's gonna let you put that on credit the way they would with a typical deductible. They will want cash in hand.
  - lotsofpulp 4y ago
    I would submit the actuaries pricing the insurance know the most about how cheap the insurance is relative to the risk. If it is only a few dollars per year, then the probability of loss must be so small that the insurance company is willing to take on the risk for a few dollars per year. Now, if you do not have $25k cash, then certainly go ahead and buy the insurance because you need it. But if you do, then you have already insured yourself.

lotsofpulp 4y ago

The insurance is to satisfy the lender's requirement for lending me money to buy the house. But if I did not have a redundant house or enough money to pay for a new home, I would also want the insurance to rebuild or repair a house. It is possible to have enough cash to replace your needed belongings, but not enough cash to rebuild the house after a fire. I am fortunate to have more than $25k available for immediate concerns. But I often find people who have more than sufficient cash such that they have already insured themself to buy additional low deductible insurance. Not that there is anything wrong with that, but in the age of low cost broad market index funds, I say why not cut out the middleman.

cactacea 4y ago
I'm a little surprised that a policy with a deductible that high meets their requirements. Out of the many, many claims I've submitted the highest I've ever seen was $5k. Insurance is cheap enough that I question the value you're saving here but hey, you do you. My entirely unsolicited advice is that you should be aware how quick you're going to need to cough up that deductible to get anything done in case you do need to make a claim. Nobody's gonna let you put that on credit the way they would with a typical deductible. They will want cash in hand.
- lotsofpulp 4y ago
  I would submit the actuaries pricing the insurance know the most about how cheap the insurance is relative to the risk. If it is only a few dollars per year, then the probability of loss must be so small that the insurance company is willing to take on the risk for a few dollars per year. Now, if you do not have $25k cash, then certainly go ahead and buy the insurance because you need it. But if you do, then you have already insured yourself.