See the posting over on the Home Owners board.
It’s merely a question of whether you can easily afford to replace the automobile or your home if it’s completely lost.
For about the last 30 years, it’s been pretty easy for me to replace a $20,000 to $30,000 automobile, so I have a liability-only auto policy and reject coverage for Collision, Comprehesive, Uninsured Motorist, Towing, etc. I do have the maximum limits for the liability coverage, $500,000.
Same thing for my home. I live in a condo, so the homeowner’s association is responsible for replacing the structure if it burns to the ground. I’m responsible for everything inside the studs (i.e., drywall, plumbing, electrical wiring, bathroom fixtures and appliances, etc. Maybe that’s a $200,000 cost. Since I can afford that hit, there’s really no reason to add the hassle and inconvenience of an insurance company to the rebuilding process.
Remember, your insurance premium includes the actuarial risk of loss, the insurance company’s cost of running the business (at least 20% of the premium) plus an allowance for how much fraud they’re expecting (could be up to an additional 30% to 40%.) You can avoid those additional costs if you “self insure” (or as the insurance pros call it “retain the risk”.)
intercst
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