Facing High Homeowners Insurance Premiums
So, if you are facing a large insurance premium rate increase, you might be considering doing without homeowners insurance, what they call going bare, meaning that if you own your house for cash, you don’t have a mortgage. You technically don’t need to have homeowners insurance. And if you live in a disasterprone area like where there’s hurricanes or fires or earthquakes or hail, sometimes the rates for insurance get so high that you might just say, “I’m not having insurance.” It’s kind of risky. But there may be a way to offset.
Going Bare vs. Raising Deductibles
Some of that risk that we’ll talk about in this video. If you’re considering going bare, be very, very cautious because if your house is destroyed or you have a serious u loss, all the money comes out of pocket. And if you have millions in the bank that you just say, I’m I’ll just rebuild my house. That’s fine. Another option you could do instead of going bare is to raise your deductible to a very high amount. Instead of having a two or $5,000 deductible, see if you can get in a 20% deductible from your insurance company.
Higher Deductibles and Partial Coverage
So on an $800,000 house, it might be 160,000 deductible. The insurance company might lower your premium. Also take a look at uh whether or not your insurance company has other options for coverage, deleting some catastrophic but keeping some of the liability. If you are deciding to go bare, as they say, and not have insurance, one option to offset or mitigate some of that loss is what’s called a parametric policy. And we’ll talk about it, but if you want more information, you can click the link.
How Parametric Policies Work
Money if a certain event happens. It doesn’t matter how much damage there is. It doesn’t matter uh they don’t do any kind of claims adjusting. They just pay out a flat fee. For example, if you buy parametric insurance, let’s say for hurricane, if a category, we’ll just make something up. A category 3 hurricane comes within 40 miles of your house, they pay you $100,000, right? Or you can make anything you want. It could be a category 2 within 100 miles, they pay you $200,000, whatever. And it’s a.
Trigger-Based Protection and Payout
It’s a trigger-based event. If this thing if this happens, you get this much money. It doesn’t matter if your house is damaged, you can actually get the payout even if there’s no damage to your property. So parametric could be a way to get at least some payout and not lose everything. It’s it’s not going to cover your entire loss. However, if you’re going bare anyways, a parametric insurance policy might help offset some of the loss or maybe get you get you some living expenses for a year while.
Limitations and Decision Awareness
You rebuild your house. Who knows? Be aware that it’s not the same as having coverage on your house. You have to make a very conscious decision to know what you’re putting at risk, what your exposure is. You also want to look to make sure that you have proper liability insurance. So if somebody gets hurt on your property or you get sued, you have coverage for that. Parametric won’t do it. U so once you’ve gotten to the point where you’re just going to have no insurance anyways, well then look at a.
Cost and Expert Advice
Parametric policy. They’re very cheap compared to other types of full coverage policies and it may be a way to not totally self-insure but have some kind of stop-loss built into your risk exposure. So to discuss this further, check with your agent, but they may not have uh you know too much experience or knowledge about this.
