Hurricanes prompt question – to buy or not to buy homeowners insurance

Years ago the Pacific Northwest had a spate of floods, a volcano blast, and an earthquake. It was the earthquake that prompted her DDH to look into getting earthquake insurance, even though our house wasn’t harmed at all.

The floods never touched us. We weren’t even in the 500-year flood zone.

The volcano led to us wearing masks against the dust for a few days and some roof cleaning, but not much else. Pictures of the volcano dust that appeared in the newspapers looked for all the world like coal dust or asbestos dust.

IFO knew that smoking + either of those were far worse for our health, especially our lungs, than either one separately. So, the upside to the volcano was that we finally were scared into stopping smoking.

However, now that we are IFO – investing for one – we cancelled the earthquake insurance. Why pay for such a remote possibility, when even in the event of said disaster the damage is likely to be small to none?

These are the calculations we all have to make when we are considering homeowners insurance for various disasters that might occur. The volcano goes off every 200 or so years, so no worries there for a while.

Now, if the Big One, that big earthquake off the coast of Oregon, does happen and a tsunami inundates the state far inland – how can insurance do any good for that?

We’ve expressed our reservations about insurance before. We support some, not other kinds. We think it is best to self-insure if at all possible. It is risk and age-dependent. Each person’s situation is different.

As you save for various types of disasters, you can drop the insurance as soon as you have the endangered asset covered with savings. Now, all your insurance payments are going to you, not to build those huge palaces insurance companies seem to love to build for themselves.

These musings also apply to places that regularly get horrible weather, like the Gulf Coast, Florida, and the Midwest, it’s just that the risks are different from the ones in the quite safe and lovely part of the U.S.


About InvestingforOne

I've been investing in various assets by myself using a discount broker for many years. Over that time, I've developed some theories that others might find useful. Plus, there is more to investing than money. Time, talent, work, friends, family all go into developing a good and satisfactory strategy.
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