Some Coastal Homeowners Going Without Home Insurance Due to Rising Costs – DON’T, Try These Instead!
January 4, 2024 by Brad Davis, CIC (edited 1/14/2024)
Home insurance costs are increasing to a point where more homeowners are opting to go without home insurance. This is happening along the coast of South Carolina and North Carolina, as well as all over the country.
The amount of people choosing not to carry home insurance over the last few years has increased from around 5/6% to around 12%. It’s not a max exodus, but a little concerning.
The cost of home insurance is the main reason for this, and some of these people are just willing to gamble it. FOR THE RECORD, I think anyone who can owns a home and can find insurance, should have it. Let’s look into a few things to consider before you even think about gambling with (what is probably) your biggest asset.
First things first.
- If you have a mortgage (including a HELOC or other type), the financial institution (or lender) will almost certainly require you to have some form of home insurance or hazard insurance.
NOTE: If you do not carry home insurance the lender may force place “Hazard Insurance” (that’s what they call it). Usually that coverage is not as comprehensive as a Home Insurance policy from an agent and it probably even costs more.
- We have only seen a very small number of our clients even discuss going uninsured, with maybe one that actually did it. But it was basically never brought up before 3 – 4 years ago.
AGAIN – we do not recommend going uninsured!
- I can’t write a blog about this without bringing up Flood Insurance. In many areas, flood damage is as likely, or more likely, than the chance of filing a home insurance claim. Everyone should consider flood insurance! This does not go info things you can do to help with flood damage or flood insurance costs.
I can’t get over how we sometimes see people pay over $3000 on a homeowner's insurance policy but won’t pay $600 for a flood insurance policy.
Alternatives to not purchasing Homeowners Insurance.
These are just things to consider. I recommend a good home insurance policy that is not stripped down.
- Consider a higher deductible(s). Most coastal home insurance policies in the Carolinas have 2 deductibles (some have 3 or more). You can typically see an AOP (All Other Peril) deductible that applies to most covered perils and a separate Wind/Hail (or Named Storm or Hurricane) deductible which applies as the name suggests. Ask your agent what the difference in premium would be with higher deductibles and make an educated decision based on your risk tolerance and how much you have in savings (to cover a large deductible).
- Discuss the options and endorsements on your policy. YES, I still say you should not strip down a policy! There may be some optional limits or endorsements that you do not need and can lower the premium.
I don’t want to get into those specific coverages because I don’t want anyone saying I told them to remove such and such coverage. But feel free to give us a call.
- Consider renting instead of owning your home. Just think about it, I am not saying sell your home. In some cases, it can make sense if you don’t want the stress of buying home insurance and then alternatively stressing about being uninsured.
- Look for ways to lower the insurance premium.
- Storm-Resilient Home Improvements – reinforce windows and doors, install hurricane shutters, etc.
- Install a back-up generator.
- Replace old appliances such as the water heater (or get a tankless water heater).
- Replace the roof if it is older or showing signs of wear. (If you have 3-tab shingles, consider going to the more resilient architectural shingles.)
- Make other updates to HVAC, electrical panels/wires, plumbing, etc. that show wear to help prevent a future claim or damage.
- Install a water leaking sensor or automatic water cut-off valve.
- Install a monitored fire and burglar alarm.
- Consult with an attorney to see if there are any ways to lower liability risks (with LLC or other way).
- Consider not filing small claims that will make your insurance go up or cause you to be uninsurable. (Though you may should speak to your agent because this can sometimes come back to bite your you-know-what.) Note: Sometimes claims on other properties you own, or owned in the past, can affect this insurance.
- Be aware that certain pets, a trampoline, free standing hot tub, or other things can be seen an attractive nuisance or liability. These types of things can cause you to pay more for insurance or become uninsurable.
- Solar Panels are good for lowering electrical costs and the environment, but they often cause a higher home insurance premium.
- Keep your credit rating up or work to improve it.
If you are still thinking the least little bit at this point that you may forego home insurance, definitely consider making these improvements to lower your risk. (But really you should have insurance.)
I haven’t gone into considerations for the super rich. But I still think most of the above applies. If someone is wealthy and has a modest home, maybe they look at self-insuring. If they have 20 million in the bank and their home is only worth $400,000, maybe they can gamble.
One last way to possibly get home insurance at a lower cost is with (what I call) a substandard policy. I don’t want to get into this because it’s really not smart in almost all cases, but in the act of trying to give as many options as I can I am sharing this. You can call us or your agent for more information.
In conclusion – you should secure quality home insurance whenever you can. If you have looked at all your options and still choose to be uninsured, read this again and if you still choose that, please do whatever you can to help protect your assets.
Remember, home insurance does more than cover your home for covered perils. It includes liability coverage (typically 100K – 500K), medical coverage, loss of use, and often other important coverages.
Disclaimer: This is based on what I see in my agency and some various blogs and articles I have recently read. For concrete numbers you should research this yourself. I am really trying to offer alternatives to going uninsured. This blog does not include everything under the sun, and READ YOUR POLICY!
Care to see what we can do for your home insurance? Please visit ThinkDavisInsurance.com or call (843) 213-0000.
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