In recent years, there has been a growing trend of homeowners lowering their insurance coverage or even self-insuring. This is due to a number of factors, including rising insurance premiums, difficulty obtaining coverage in certain areas, and a desire to save money. For many homeowners without a mortgage here in South Florida, many are opting to simply install high-impact windows and doors along with a newer roof. Instead of paying high annual insurance premiums, they are saving this money in a disaster relief fund should they encounter any damages to their homes.
Why are homeowners lowering their insurance coverage or self-insuring?
There are a number of reasons why homeowners may choose to lower their coverage or self-insure. Some of the most common reasons include:
- Rising insurance premiums. Insurance premiums have been rising steadily in recent years, making it difficult for some homeowners to afford coverage.
- Difficulty obtaining coverage in certain areas. In some areas, it can be difficult or impossible to obtain homeowners insurance. This is often due to factors such as high risk of natural disasters or crime.
- A desire to save money. Self-insurance can be a way to save money on insurance premiums. However, it is important to note that self-insuring can also be risky, as homeowners are responsible for covering the cost of any losses out of pocket.
What are the risks of lowering insurance coverage or self-insuring?
There are a number of risks associated with lowering insurance coverage or self-insuring. Some of the most common risks include:
- Financial hardship in the event of a loss. If a homeowner experiences a loss, such as a fire or flood, and does not have adequate coverage, they may face significant financial hardship.
- Difficulty rebuilding a home after a loss. If a home is destroyed or severely damaged in a loss, homeowners may have difficulty rebuilding it without insurance.
- Legal liability. If a homeowner is sued for damages, they may be held personally liable if they do not have adequate insurance coverage.
What are some alternatives to lowering insurance coverage or self-insuring?
There are a number of alternatives to lowering insurance coverage or self-insuring. Some of the most common alternatives include:
- Raising the deductible. Raising the deductible can lower the cost of insurance premiums. However, it is important to note that raising the deductible will mean that homeowners will have to pay more out of pocket in the event of a loss.
- Bundling policies. Bundling homeowners and auto insurance policies can often save homeowners money.
- Looking for discounts. Many insurance companies offer discounts for things such as home security systems, impact-resistant windows, and good credit history.
- Shopping around for insurance. It is important to compare quotes from multiple insurance companies before purchasing a policy.
Lowering insurance coverage or self-insuring can be a risky decision. Homeowners should carefully weigh the risks and benefits before making a decision. If homeowners are considering lowering their insurance coverage or self-insuring, they should talk to an independent insurance agent to discuss their options.
Are you looking to buy or sell a property in South Florida? We can help! Contact Natasha at Live South Florida Realty, Inc. today! Also, be sure to download the free Florida Home Search app for your smartphone or tablet.