Fire risk and building costs were the stated reason my insurance went up 50% last year. And I'm not in a high risk zone... the only way I can cut it by any useful amount is by increasing the deductible to $10K+
A carrier leaving the market doesn't bode well. It is hard to enough to get on the property ladder for first time buyers, the challenge may soon become staying on it.
Your deductible should be for the largest amount of cash you can reasonably part with. Statistically you will make it out better with a higher deductible but lower monthly premiums.
I had a flood in my house with a 5k deductible and when we told the restoration company we were going private on the services they magically reduced the price by 50% and we only paid 3k out of pocket. You also have to take into account that trades will jack the prices on insurance claims which is going to be baked into your monthly rate, so if you can go private when possible you can also save money in the long run.
When I first bought the house, I went down the curve of deductibles, at each step asking "what's the payback period for the difference in deductible between covered losses that would exceed $50K?" At the short end of the scale, it was in the 5 year range, then went to 8 at $5K, was over 12 at $10K, and over 17 at $25K. That's how I originally settled on $5K.
Based on this thread, I just went back and re-priced them (my insurance has a nice-enough online quoter for basic transactions like this). The curve had shortened some and so, while I could pay $25K out of pocket, I upped my deductible to $10K and doubled my personal liability coverage. Starting next month, I'll be saving a little over $500/yr and have a more personal liability coverage to boot.
Amusingly, there are coverages that have a $500 deductible. Who the hell wants to even talk to an insurance company over a loss that doesn't significantly exceed a $1K deductible? My insurance discounts include a $495/yr discount for "no claims in the last 5 years". If I had a $500 deductible and had even a $2500 loss, I shouldn't submit it if it would remove that discount for 5 years...
I can understand this for e.g. cars. In case of minor damage the insurance isn't involved, leading to a significantly lower price with deductible.
Are there cases of minor damage to burning houses? If it burns it burns? The price with deductible would only be lower proportionally to the maximum possible damage.
Homeowner insurance covers a lot more than fires (and a kitchen fire could easily be a partial fire, as some friends of mind discovered last year). Theft, hail damage, trees falling, pipes bursting, etc all are likely to be covered partial losses.
$10k seems insane to me because you are almost certainly guaranteed to be out of pocket for things that your insurance won't cover. In my case I had an issue that the HOA's master policy covered but my own HO6 didn't so there was zero loss of use coverage. Short-term furnished apartments run close to $7,000/month out here (typical minimum lease is three months), so even if you have a situation where your own insurance is providing loss of use coverage you're likely to blow through that pretty damn quickly.
So, sure, you can absorb a ten thousand dollar deductible. Can you afford another twenty grand (or more) on top of that for some place to live while your home is repaired/rebuilt?
Deductibles are fiction for home owners insurance in California. After each of the recent natural disasters, the permitting departments dragged their feet, causing years of delay before homeowners could rebuild.
At the same time, the disaster created a construction labor shortage, and the price of construction increased 20-30% between the insurance payout and permit approvals.
Stricter regulations are required. In particular, it should be illegal to block permits for equal or improved structures, and the insurance companies should be on the hook for the total cost of reconstruction/buying a new home up to the day the homeowner moves in (minus deductible).
I don't understand. Are you saying a $10k deductible is bad? Why? Are you saying it's too high or too low? You mention problems due to things not covered by insurance. How would changing the deductible improve things there?
$10,000 is way too high. For any given covered event the deductible is the amount of money you're on the hook for.
What I'm saying is that for anything major you're likely already going to be out of pocket for thousands, perhaps tens of thousands of dollars in costs that your insurance company won't cover in addition to the deductible. Maybe you have ten grand to piss away on a deductible. Do you have twenty? Thirty?
Living in a house with smoke damage while it gets repaired is significantly more harmful to your quality of life (especially if you're WFH) than driving a car with accident damage.
If you’re going to have the insurance for 50 years, expect to have 1 claim, and the difference in price between a $5K and a $10K deductible is $250/yr, which choice of deductible is “pissing away” more money?
If you can predict your claims why bother paying for insurance at all until you need it? We're both commenting on a post about an insurer that's bailing because they are having to pay out more than they can afford in the face of increased natural disasters. The most relevant information I could find claimed that the average Oregon homeowner makes a claim roughly once every nine years (or somewhere over five claims in your timeframe).
If you have $30k of expenses, and $10k are the deductible, you should try to fix the other $20k, since they're bigger. For example, try to buy a second insurance that will cover those other $20k, or switch to a different insurance company that will put the $20k in the covered category.
Focusing on reducing the $10k deductible to e.g. $2k, but leaving the other $20k to remain seems like a backward strategy to me.
In my case I'm dealing with a condo, so no standard master policy nor any HO6 policy would cover loss of use. An umbrella policy might cover it, and you could certainly find something bespoke but it would hardly be worth the cost.
For a single-family home I would've been covered but the amount of loss-of-use coverage is generally tied to the rest of the coverage you've got which is tied to the value of your home. With the cost of 'short term' housing (at least in the Bay Area) you're likely to blow through your limits pretty quick even if you ignore all of the other costs related to loss of use (commute, food, utilities, etc.).
Keep in mind the vast majority of homeowners insurance policies aren't "we're going to make you whole", they're "we'll pay for certain, named events up to a dollar amount". The things that your carrier excludes are likely to be things that every other carrier in your state will exclude.
Besides the bet that you'll save money with a $10,000 deductible falls apart once you make a second claim in fifty years. The best numbers I could find suggest that homeowners typically file a claim every 9–10 years. You've likely already blown through the projected savings by the second decade, by year fifty? The lower deductible would've been much cheaper.
A carrier leaving the market doesn't bode well. It is hard to enough to get on the property ladder for first time buyers, the challenge may soon become staying on it.