7 ms·

You don't have to have home insurance by law, at least not in the US If you don't own your house outright, the bank that owns part of it may require insurance

by dmoy 3y ago

You don't have to have home insurance by law, at least not in the US If you don't own your house outright, the bank that owns part of it may require insurance as a prerequisite for loaning you money.

mindslight 3y ago
You're right about the ultimate legal situation, but there's two problems I see with dropping insurance on a paid off home. The first is that the companies, seemingly operating in lock step, will heavily penalize you if you change your mind and want to go back to insuring. The second is the liability component, whereby simply owning a piece of real estate means you're a juicy target to be found jointly liable for a whole host of things that most people would consider unreasonable - eg someone trespasses, injures themselves, and then sues you. I've long said that one major threat that "regular people" would suffer from the consumer surveillance industry was going to be insurance (another being fine-grained price discrimination). It looks like both are really starting to come into swing. The best time for US privacy legislation (including something analogous to the GDPR) was 20 years ago, the second best time is now.
- dmoy 3y ago
  > The first... The second Sure, but neither of those are due to it being required by law. In the first case there I don't know what's happening, I guess maybe insurance companies have figured out that people dropping insurance and then picking it back up correlates with increased claims due to stuff that happened during the interim. In the second case there, you can definitely get liability insurance separately from homeowners. And it's wayyyy cheaper. Or, live in a country that isn't as crazy litigious as e.g. USA. But again, neither is a legal requirement, which is all I was getting at initially given the top comment in this chain.
- tptacek 3y ago
  I have never valued insurance more than the moment at which I owned my house outright. If you're so financially secure that the loss of an asset that large is manageable, I sort of don't much care about what you think about insurance rates?
  - mindslight 3y ago
    Apparently in your book anybody that isn't effectively negative on assets (everyone needs a place to live) is so rich they're not entitled to an opinion on insurance rates? This kind of weird aggro-dismissal seems like an inevitable result of "privilege" politics based around dragging everyone down to the lowest level. Having a place to live where one isn't burning heaps of money on rent should be our expected societal baseline, not some exceptional thing to be attacked. But back to the topic - a total catastrophic structure loss would indeed be a problem. But from what I've seen, most insurance claims are not for total losses but rather things like water leaks and roof damage that have much higher sticker prices than what it actually costs to maintain/triage/mitigate/calmly repair. I've known people that have submitted claims for ice dams, oil burner blowbacks, new roofs ("wind damage"), finished basement water damage, etc. I will never submit an insurance claim for those type of things, and so it makes sense to at least consider self insuring, especially when rates are doubling every few years.
    - tptacek 3y ago
      You can have whatever opinion you'd like about insurance rates, but if insurers are sustainably incurring losses, rates have to go up, one way or the other: either insurers raise their rates, or they exit the market, decreasing competition and raising rates. There's no way to moralize out of this! Regarding minor claims: I think what I've learned about homeowners insurance is: don't make minor claims. That's not what the product is for. Homeowners insurance (1) protects you from total loss of your primary asset (ie, from fire) and (2) protects you from being bankrupted by lawsuits. If you use it to repair leaks, you're going to take a bath. Have you applied for a homeowners policy recently? Literally one of the first questions insurers ask is: "have you made homeowners insurance claims?".
      - mindslight 3y ago
        I didn't try to "moralize out of this", apart from the condemnation of many types of personal liability people will find themselves on the receiving end of based on simply owning real estate? That could certainly stand to be reformed, but the criticism is aimed at the prevailing laws rather than the insurance companies for working with them. Personally my gripe is that I wish insurance companies would update what are seemingly quite obtuse pricing models, rather than pushing customers into invasive surveillance tech. For example I'd appreciate if it were possible to raise my deductibles by an order of magnitude and see a meaningful drop in premiums. But instead it seems like the only coverage knob that has an effect is the max coverage limit (which when you think about it, actually shouldn't even be a thing. the whole point of insurance is to cover the long tail risk). My gripe is a little more pronounced for auto, where I quoted out dropping the miles driven on one vehicle to nearly zero and it reduced premium by a mere 10%. Re minor claims, maybe I'm underestimating how much future premiums went up after those somewhat frivolous homeowners claims I mentioned, and they effectively just ended up forming loans rather than affecting the overall expected value of losses.
wincy 3y ago
My uncle didn’t have insurance for a house he’d paid off. An arsonist burned it down six months later and then he proceeded to get letters from the city telling him to mow his lawn for the next ten years.
- dylan604 3y ago
  Just because you don't have a livable structure on the property means the property is exempt from any of the property regulations. What a weird rant.
- pavel_lishin 3y ago
  What does that have to do with insurance?
deleted 3y ago
[deleted]

by dmoy 3y ago

You don't have to have home insurance by law, at least not in the US If you don't own your house outright, the bank that owns part of it may require insurance as a prerequisite for loaning you money.

mindslight 3y ago

You're right about the ultimate legal situation, but there's two problems I see with dropping insurance on a paid off home. The first is that the companies, seemingly operating in lock step, will heavily penalize you if you change your mind and want to go back to insuring. The second is the liability component, whereby simply owning a piece of real estate means you're a juicy target to be found jointly liable for a whole host of things that most people would consider unreasonable - eg someone trespasses, injures themselves, and then sues you. I've long said that one major threat that "regular people" would suffer from the consumer surveillance industry was going to be insurance (another being fine-grained price discrimination). It looks like both are really starting to come into swing. The best time for US privacy legislation (including something analogous to the GDPR) was 20 years ago, the second best time is now.

dmoy 3y ago
> The first... The second Sure, but neither of those are due to it being required by law. In the first case there I don't know what's happening, I guess maybe insurance companies have figured out that people dropping insurance and then picking it back up correlates with increased claims due to stuff that happened during the interim. In the second case there, you can definitely get liability insurance separately from homeowners. And it's wayyyy cheaper. Or, live in a country that isn't as crazy litigious as e.g. USA. But again, neither is a legal requirement, which is all I was getting at initially given the top comment in this chain.
tptacek 3y ago
I have never valued insurance more than the moment at which I owned my house outright. If you're so financially secure that the loss of an asset that large is manageable, I sort of don't much care about what you think about insurance rates?
- mindslight 3y ago
  Apparently in your book anybody that isn't effectively negative on assets (everyone needs a place to live) is so rich they're not entitled to an opinion on insurance rates? This kind of weird aggro-dismissal seems like an inevitable result of "privilege" politics based around dragging everyone down to the lowest level. Having a place to live where one isn't burning heaps of money on rent should be our expected societal baseline, not some exceptional thing to be attacked. But back to the topic - a total catastrophic structure loss would indeed be a problem. But from what I've seen, most insurance claims are not for total losses but rather things like water leaks and roof damage that have much higher sticker prices than what it actually costs to maintain/triage/mitigate/calmly repair. I've known people that have submitted claims for ice dams, oil burner blowbacks, new roofs ("wind damage"), finished basement water damage, etc. I will never submit an insurance claim for those type of things, and so it makes sense to at least consider self insuring, especially when rates are doubling every few years.
  - tptacek 3y ago
    You can have whatever opinion you'd like about insurance rates, but if insurers are sustainably incurring losses, rates have to go up, one way or the other: either insurers raise their rates, or they exit the market, decreasing competition and raising rates. There's no way to moralize out of this! Regarding minor claims: I think what I've learned about homeowners insurance is: don't make minor claims. That's not what the product is for. Homeowners insurance (1) protects you from total loss of your primary asset (ie, from fire) and (2) protects you from being bankrupted by lawsuits. If you use it to repair leaks, you're going to take a bath. Have you applied for a homeowners policy recently? Literally one of the first questions insurers ask is: "have you made homeowners insurance claims?".
    - mindslight 3y ago
      I didn't try to "moralize out of this", apart from the condemnation of many types of personal liability people will find themselves on the receiving end of based on simply owning real estate? That could certainly stand to be reformed, but the criticism is aimed at the prevailing laws rather than the insurance companies for working with them. Personally my gripe is that I wish insurance companies would update what are seemingly quite obtuse pricing models, rather than pushing customers into invasive surveillance tech. For example I'd appreciate if it were possible to raise my deductibles by an order of magnitude and see a meaningful drop in premiums. But instead it seems like the only coverage knob that has an effect is the max coverage limit (which when you think about it, actually shouldn't even be a thing. the whole point of insurance is to cover the long tail risk). My gripe is a little more pronounced for auto, where I quoted out dropping the miles driven on one vehicle to nearly zero and it reduced premium by a mere 10%. Re minor claims, maybe I'm underestimating how much future premiums went up after those somewhat frivolous homeowners claims I mentioned, and they effectively just ended up forming loans rather than affecting the overall expected value of losses.

wincy 3y ago

My uncle didn’t have insurance for a house he’d paid off. An arsonist burned it down six months later and then he proceeded to get letters from the city telling him to mow his lawn for the next ten years.

dylan604 3y ago
Just because you don't have a livable structure on the property means the property is exempt from any of the property regulations. What a weird rant.
pavel_lishin 3y ago
What does that have to do with insurance?

deleted 3y ago

[deleted]