Here's another perspective. Property insurance and liability insurance are two different scenarios.
I view liability insurance as protection for my assets and estate. Liability claims are less frequent but can be enormous. I carry a significant amount of liability insurance. Property insurance, to me, is more like gambling. The amount of loss is limited by the value of the property insured. One can carry less or no coverage and rationalize the reduced or saved premiums as a hedge against the cost of damages. Here's a real life example. I live in Louisiana where flooding occurs frequently. When I bought my house in 1981, it was not in a flood zone. I cancelled the flood insurance on the house. The premiums were about $250 annually. After Hurricane Katrina in 2005, the flood maps were redrawn and my house was just barely in the flood zone. I continued to decline flood insurance and the now $1200 annual premium. A few years ago, the maps were again redrawn and the annual premium increased to $2600!! Our house flooded last year as a result of a freak "rain bomb" (12-15 inches in 3 hours!). By this time, I estimated I had about $25K in flood insurance premiums "in my pocket". Although the Admiral and I spent quite a bit more than $25 to rebuild the house, much of the cost was upgrades and improvements that we had been talking about for years. My guess is that the real cost to repair only the flood damage (drywall, insulation, flooring) was about a break even. How much was 25 year old carpet worth, anyway? :) In hindsight, would I do it again? Yes. This year, flood insurance premiums have again been recalculated. My premium, including contents, dropped to $680 from $2600. It's now worth it. Gamble on property, not liability. I have several boating friends that carry liability only on their boats. -- Dennis C. Touche' 35-1 #83 Mandeville, LA
