Property insurance deductibles - can you meet them?

[Deleted]

I live in a storm and flood prone area of the US and know many folks struggling after our latest events because of the financial challenges those weather events presented.  Even those folks with property insurance often face many thousands in deductibles. This is an area where some have historically received help through grants or low-interest loans supported by various state or national relief programs like FEMA.  

There's no shortage of publicity about how few Americans have any substantive emergency fund, and recent talk of diverting federal emergency response aid to other uses shows that resource may not be reliable.  After a hail storm destroyed many roofs in my community, I learned that one neighbor had a $9,000 deductible which she was unable to meet.  Ultimately, the roofer financed her deductible at an interest level just short of payday lending.  Other homeowners, particularly seniors without a mortgage, no longer carry insurance on their properties. 

My 2% windstorm deductible is currently $3,800 (goes up annually because I have inflation-adjusted coverage).  While I would prefer to spend almost $4 grand in other ways, this would not damage us badly.  

Can you meet your deductible?  Can most Americans?  If Fed funds aren't available to assist with property restoration, what happens?

[chapeau]

Ours is $5k. It’s in a bank that is not convenient at all. Well, it was convenient to my previous job. I had to mail them a $25 check a few months ago to avoid having it sent to the state as unclaimed property.
Their website does not play well with my Mac, which is very frustrating, but they have decent interest for a brick and mortar bank.
We live in a relatively reasonable area, weather-wise. Occasional (rare) hail or tornadoes, but no hurricanes or wildfires.
Can I think of approximately 6 billion places I’d rather spend $5k? Oh yes. But most of the time I try to forget it’s even there.

[Deleted]

I froze my deductible at $2000 because it, too, kept going up annually because of inflation-adjusted coverage.  I am in my 60s so looking at retirement.  I didn't want it to get so high that I couldn't pay it.

I think it cost me an extra $25 a year.  The cost of the insurance still goes up a little each year, but it isn't unreasonable.  I can't imagine owning a home and not having insurance.

[andi9899]

Yes. My deductible is a flat $1,000 and has been forever. Any damage I would claim would easily be over that.

[Tiny]

Hmmm. I've never really thought much about the high deductibles I have - since if something that costs that much happens - it's gonna be something catastrophic. There aren't any natural disasters in my area. I think the biggest threat to total house destruction for me would be a house fire or if my house explodes from a natural gas leak. I'm fairly confident neither of these things will happen.

I intentionally have really high ones on my house, car, and rental properties. Even my HDHP for health care. I can't list off the amounts of the deductibles because I don't know them off the top of my head. I don't loose sleep because I have 10K I could access rather quickly (this is my general "emergency" fund) and then there's plenty o' money in my "After Tax" investment accounts I could tap or other lines of credit (HELOC or CC).

I know I wouldn't be so "meh" about this if I did live with some threat to my property. I'd view my insurance and costs differently (or maybe would just go uninsured and then few my house as "disposable').
OK, there is some threat of hurricane water damage to my property in Florida, but it's not a big worry for me (the buildings/subdivision were built in the '70's and they've weathered a lot of bad weather successfully).
FWIW:  when I bought the Florida property (at the bottom of the market - during the Great Recession) I DID kind of view it as "disposable" and that I might loose the money I invested/paid for it.  It was like buying a Luxury Vehicle in price though - so I kind of consoled myself that the lose wouldn't be catastrophic.   I have always insured it.  And I no longer think of it as 'disposable'  as it's weathered another hurricane and is still standing.   

[Deleted]

Mine is .5%  or $1600.

I wouldn't make a claim unless it was worth many times that.  I learned a long time ago, not to make a small homeowners claim. 

[dannylion]

This is one of the many reasons I really like my online savings accounts where I can have as many subaccounts as I want.  I have separate accounts for things like short-term EF, long-term EF/savings, taxes, insurance premiums, house maintenance, car expenses/saving for a new car, house remodeling, replacing appliances, replacing computers, gifts, unexpected things, and every other conceivable recurring, annual, or emergency expense I can think of, including a subaccount with the total of all my insurance deductibles plus the one-year out-of-pocket max for my health insurance.  I add to all the accounts every month, so if expenses go up, I'm still covered.  I think if I did not do this, I would experience anxiety.  None of those accounts was fully funded all at once; they were all built up over time.  

I know a lot of people are comfortable just putting all savings into a single account, and it works for them.  I find comfort in being able to see that everything is covered by name and being able to adjust individual amounts as needs and expenses increase over time (for some reason, they never seem to decrease over time).  

So, yes, I can cover my deductibles.  I cannot answer for most Americans; I only know about 100 or so of them, and know maybe 25 of those well.  For the ones I know and with whom I have discussed financial topics (about 5 or 6), I'm sure they can cover their deductibles.  I don't know about the rest.  

[TheOtherMe]

My deductibles are $1000.  Yes, I can cover those.

I have not filed a claim since I lived at this house.  I did call about filing a claim when my basement flooded.  The repair cost was not worth filing and I'm sure the premium would have gone up.

The last claim I filed was in 2002 when my car was hit in front of the house I was renting in Black Hawk CO in the middle of the night.  Didn't stop.  

The last claim I filed on a house was in the 80's when my house was hit by lightning.

[Deleted]

Jan 11, 2019 19:00:10 GMT -5 @bamafan1954 said:

I can't imagine owning a home and not having insurance.

My parents eventually dropped the windstorm coverage on their paid-for home in Myrtle Beach.  They said the land was worth more than the house, anyway. They would have been OK if it had blown away.

I think my deductible is $1,000 or $2,000.  I'm in Tornado Alley so overall premium is high, but there's no giant windstorm deductible like there is in hurricane areas.  No problem with managing that deductible level.  Heck, I had $6K/year deductibles on my health insurance till Medicare kicked in.

[Deleted]

We filed for roof replacement in 2016 after a hail storm.  Most of our neighbors played the "I'll cover your deductible" game from the roofer but we forked out our $3,000 (at that time) deductible.  I feel lucky that our little place is super sturdy (roof decking is tongue-in-groove dimension lumber vs plywood) but I sometimes feel that my taxes and premiums are taking a hit from those who can't or won't insure, or meet their deductible..  But that's a discussion for another place.  

[Deleted]

Jan 11, 2019 21:27:25 GMT -5 @athena53 said:

Jan 11, 2019 19:00:10 GMT -5 @bamafan1954 said:

I can't imagine owning a home and not having insurance.

My parents eventually dropped the windstorm coverage on their paid-for home in Myrtle Beach.  They said the land was worth more than the house, anyway. They would have been OK if it had blown away.

I think my deductible is $1,000 or $2,000.  I'm in Tornado Alley so overall premium is high, but there's no giant windstorm deductible like there is in hurricane areas.  No problem with managing that deductible level.  Heck, I had $6K/year deductibles on my health insurance till Medicare kicked in.

Insurance is more than replacement.  What about liability?  

If you have ever been sued (and I have), you know how important liability insurance is.  I have it for my job as well.

[tractor]

Our deductible is only $1,000 so it would be easy to cover. Our insurance runs @$100/month but we are in a no flood, no hurricane, low tornado risk area. I have never needed to file a claim in the past 25 years. Fire is probably the biggest risk, and not a California fire, more like wife leaving the curling iron on a towel type fire.

We also have a 2 million $ liability policy with a $250 deductible that costs @ $30/month.

[NomoreDramaQ1015]

Ours is $5k. We could cover it but I'm not filing unless the claim is many times more than that. I treat it as catastrophic coverage.

[Deleted]

Jan 11, 2019 21:58:58 GMT -5 @bamafan1954 said:

Insurance is more than replacement. What about liability?

If you have ever been sued (and I have), you know how important liability insurance is. I have it for my job as well.

I'm the Insurance Lady, remember? My parents didn't drop the entire policy. Windstorm coverage was priced separately. They would have been covered for theft, liability and other causes such as fire. When I was a teenager I asked my Mom why we didn't just drop car insurance because they said it was so expensive. Mom was a HS graduate but gave me an emphatic explanation of why going without liability coverage was a very bad idea.

I've got a $2 million umbrella on top of my regular liability coverage. If I ever hit anyone with my car and they get whiplash, they've won the friggin' lottery.

[Deleted]

We carry an umbrella liability policy as well, but reduced it from $5 million to $2 million when DH retired back in 2001 because there was less risk of a lawsuit over a work-related issue.  Our biggest risk is someone claiming they were injured do to a crack in our sidewalk, etc.  

[Deleted]

My umbrella policy is only a million, but I don't think there's a real big target on my back for lawsuits.   Nearly all my assets are in retirement accounts and my primary residence and in my state home equity is exempt from legal action up to 390K...which is more than my house is worth.   It was only $92/year for the million, so I went with it.  If it was more costly, I probably would have skipped it. 

[Deleted]

Here's a question for people with high deductibles.  If you get sued for liability, does the deductible apply there as well?

andi9899 might know.

[andi9899]

Jan 12, 2019 10:06:26 GMT -5 @bamafan1954 said:

Here's a question for people with high deductibles.  If you get sued for liability, does the deductible apply there as well?

andi9899 might know.

No. The deductible only applies when you fix your property.

[Blonde Granny]

OK, you made me look at my policies: $1000k on house. Car insurance: Property Damage deductible $200 comprehensive & collision $1000 each.

So yes, I can cover these without any problems.....but I sure don't want to have it do it.

[zibazinski]

I dropped my flood as soon as I paid off my mortgage. My neighbor across the street is not in the flood zone and my house is higher elevation than hers. I kept everything else.

[haapai]

Is it terrible that I don't know my deductible, but that I am confident that I could pay it? 

I've got a fairly large fund set aside for major repairs and much-needed upgrades, so meeting the deductible would not be an issue.  Where can I find guidance as to what size of a repair merits the risks associated with filing a claim that will likely cause premiums to increase? 

[Deleted]

Jan 12, 2019 10:08:49 GMT -5 andi9899 said:

No. The deductible only applies when you fix your property.

I agree- I've never seen a personal policy with a deductible on the liability coverage. It typically applies only to damage to your own house or vehicle.

[Deleted]

Jan 12, 2019 14:29:43 GMT -5 @athena53 said:

Jan 12, 2019 10:08:49 GMT -5 andi9899 said:

No. The deductible only applies when you fix your property.

I agree- I've never seen a personal policy with a deductible on the liability coverage. It typically applies only to damage to your own house or vehicle.

My umbrella policy requires me to pay $5k.  I don't think they call it a deductible, but I can't remember what they do call it.

[mollyanna58]

Jan 12, 2019 21:44:46 GMT -5 @bamafan1954 said:

Jan 12, 2019 14:29:43 GMT -5 @athena53 said:

I agree- I've never seen a personal policy with a deductible on the liability coverage. It typically applies only to damage to your own house or vehicle.

My umbrella policy requires me to pay $5k.  I don't think they call it a deductible, but I can't remember what they do call it.

Retention.  And that usually only applies to things that your personal liability (Homeowners) may not cover, like libel and slander.

[Deleted]

Jan 12, 2019 22:42:30 GMT -5 mollyanna58 said:

Jan 12, 2019 21:44:46 GMT -5 @bamafan1954 said:

My umbrella policy requires me to pay $5k.  I don't think they call it a deductible, but I can't remember what they do call it.

Retention.  And that usually only applies to things that your personal liability (Homeowners) may not cover, like libel and slander.

No, it's a flat $5000 regardless with my policy (Alfa).  I think it is to make sure you have skin in the game.

[Deleted]

Jan 13, 2019 8:58:01 GMT -5 @bamafan1954 said:

Jan 12, 2019 22:42:30 GMT -5 mollyanna58 said:

Retention.  And that usually only applies to things that your personal liability (Homeowners) may not cover, like libel and slander.

No, it's a flat $5000 regardless with my policy (Alfa).  I think it is to make sure you have skin in the game.

Well, that's sucky.   I'd get coverage elsewhere. 

[Deleted]

Jan 13, 2019 11:39:49 GMT -5 minnesotapaintlady said:

Jan 13, 2019 8:58:01 GMT -5 @bamafan1954 said:

No, it's a flat $5000 regardless with my policy (Alfa).  I think it is to make sure you have skin in the game.

Well, that's sucky.   I'd get coverage elsewhere. 

Note that that's on her Umbrella policy, not her primary policy. I got curious after reading this and checked my Umbrella policy. I have a $250 retention. That means that if I cause more than $500K in damage to someone else in an at-fault accident, my regular policy pays the first $500,000, I pay the next $250 and they pay up to $2 million over that. Same for Liability on my Homeowners policy.

No complaints here! To be practical, anyone who carries Umbrella coverage must have enough assets at risk that they can afford to chip in $250 (or $5,000 in SouthernSusana's case) on a 7-figure claim.

[Lizard Queen]

I don't know what it is, but I can cover it. I don't live in an area prone to natural disasters. I don't think my parents ever had a claim, much less me. My friend made a claim when her hot water heater broke and flooded her somewhat finished basement a bit. That's the only claim I'm aware of by anyone I know. My xsil' s parents had a house fire caused by lightning hitting an ungrounded antenna. I don't think they had insurance. Smoke (not so much fire) damaged their belongings, except for those stores in Rubbermaid totes.

[❤ mollymouser ❤]

We can even meet our ridiculously-huge earthquake deductible.

[buystoys]

I don't know what ours is, but we could meet it.  It might mean taking extra money out of investments, but that's what they're for.