Opting to be uninsured

Or very expensive insurance.
My boat ($30k) insurance is about $500/pa. And I have a terrible claims record (I written of at least 2).

Are you likely to make a claim in 30years? Probably.
$5k/pa for 30 years is $150k. The more properties you own the higher the likelihood of a claim.

Blacky

 

Stupid Americans.

But to the OP, even this guy had a safety net. And end of day Insurance is the same. A safety net.

 

Having a spare couple of hundred k to replace a house is one thing. Got a spare million in case of a liability event?

 

Hey now this is interesting

What if I insure for 50k building only - but building a new house costs 400k so it's heavily under-insured (insured only 50/400 = 12.5%). When pipe bursts and I call plumber out to fix pipe, he charges me $1000, will I only get $125? This actually happened and what you described was not what I experienced - I was definitely underinsured but not extreme like in my example - but I feel like the insurer doesn't really have this step (checking whether and to what extent it's underinsured) in their process - they just check whether the claim amount is under the limit and pay out if claim conditions are met.

Absolutely. I will be at least buying some sort of umbrella public liability policy, or using trusts etc to mitigate risks of this nature. I'm just talking about self insuring the building itself.

 

it doesn't work that way - you can have claims up to the maximum of your insured amount. So if it is $1000 you will get $1000 - excess. Why would anyone underinsure in the first place - it is like maybe $10-$15 extra per month

 

When you take out a policy, you enter your address etc and number of bedrooms and the insurance company spits out a number that they calculate a typical total loss at. There is a range you can insure for but they have minimums... try getting an insurance policy for 50k on a 400k house and see how far their websites let you get. Insurers actuaries are far smarter at this than you or I.

 

i would advise against it. the risk is just too high.
You remind me of the a friend in university who basically was trying to cut a few dollars here and there to save but was also well off to do. He had a sports car in the early 2000s. and decided not insuring for one year to save some $$ similar to yourself which really does not make sense. One day for those who knows the suburb glenhuntly, there is commonwealth bank on the corner of the station. it was raining hard and while trying to turn he was probably speeding a bit, the car flew straight into the bank. Each security window etc was around 10K each not to mentioned the damages etc which amounted to 100K or more. I did see him maybe 1 year later on the train and he said that was the dumbest thing he ever did.

Similar to house, you could have someone climb in injured himselft try to sue you etc or just a rogue accident which was no fault of your own. Either way without insurance is not smart at all.

 

5k/year is nothing. Also consider that when a property is damaged (fire etc) it will not be generating income.

$13.70 per day (before deductions) is what you are talking about. I'm sure you could focus your energy on something else to generate $13.70 per day.

Run through each insurance event that could happen. Now think about how dumb and careless the average person is. Now consider that half the population is dumber and more careless than that. Now think about how many people have worked on your property during construction and repairs and how many will live in it. Would you back them all for $13.70 per day?

Have one less pint at the pub instead.

 

Wow some really risk adverse people here. I seem to go against the grain as someone who also self insures for pretty much everything. The only reason I have building insurance is because of the lender's requirements - but for example I have one unencumbered property which is uninsured.

If I had my choice, most of my properties would not be insured - especially those that aren't worth much more than land value.

 

So far everyone seems to have concentrated on the material side of this, aside from @Hosko that touched on liability.

What if your tenant was badly injured in one of your un-insured IP's and could no longer work and had a lifetime of expensive medical needs to look forward too. If you were found at fault, after possibly a lengthy and very expensive legal battle that you'd also have to pay for, you could be up for millions.

I wouldn't even contemplate the thought of not insuring.

 

I'd be interested to know where you can get liability as a standalone policy on a residential property. Off hand I wouldn't have thought it likely.

 

@brettc - I had inquired through Eagle a few years ago for business.

 

Not having insurance just doesn't make any sense to me.

How the heck do you do an insurance job if you haven't got insurance to start off with?

 

I am sure you could, otherwise combine it with some other cheaper insurance.

 

change the address on your neighbors policy ?

 

Hmmmm....perhaps after cutting the neighbour's grass I could scrummage around for a policy statement...lol.

 

Crazy not to have it. We bought a house inner city Brisbane which was hit by a storm 2 months later. $30-40k damage from hail. Completely managed by insurance company and didn't have to do a thing except online claim and approve works. Insurance is less than $2k a year, so ahead for the next 15yrs or so now. Had another couple grand worth a damage from another storm which was also covered..

Not worth the risk for the sake of $1-2k in tax deductable expenditure (maybe a lot more in high end house or high risk area).

 

Apparently you don't need to have a bank account to do a bank job just a suped up AMG Merc or a beemer for the ride.