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Wetzel Insurance Agency Blog

All You Ever Wanted to Know About Insurance

Homeowners Insurance: “Going Bare”

The state of our economy in years past has not been very promising for homeowners. Many people have taken a hard look at their homeowners insurance bill and wondered if they could manage without it. While this is a possible option, it is not one we would recommend. In the insurance world, this term is called “going bare.” Here are some questions you will need to ask yourself before making this dangerous decision of dropping your homeowners insurance.


Is it possible to drop my homeowners insurance policy?

Unlike car insurance, there is no requirement to have a homeowners insurance policy; however, if you have a mortgage, you will most likely not be able to drop your coverage. Most lenders will require the owners of the home to have coverage.


Would I be able to put money into an account regularly to cover damages?

Without any homeowners insurance coverage, there will be no money granted to you after an accident. Make sure to put money into an account regularly so that you can be prepared. Without this extra money, you will be stuck borrowing money, paying for the repairs by credit card, or not making the repairs at all. Any of these options could have some heavy repercussions.


What kind of disaster will I need to be able to cover?

The best way to decide how much money you will need is to come up with a worst case scenario for a natural disaster. Figure out what it would cost to repair or replace your major parts of your home like the roof or walls. In addition to the cost of the house itself, there will be other costs for your belongings, clothing, furniture, landscaping, food, and the cost of debris removal. After adding everything up, you might find that your homeowners insurance policy was not as expensive as it seemed.


Can I afford a basic hazard policy?

If your goal is to spend the least amount of money, talk to your agent about having a basic hazard policy. While this is not technically homeowners insurance, your home would be covered in the case of a fire, tornado, or other major disaster. After deciding whether or not to relocate, the insurance company would pay to have the home rebuilt. This might sound like a simple and easy fix to save some money, but keep in mind that a basic hazard policy will not cover any of your possessions in the case of an accident. The home owners would have to replace all of their personal belongings.


Would I still have liability coverage if I dropped my homeowners insurance policy?

After dropping your homeowners insurance policy, your property is no longer protected from accidents that could happen. While a hurricane or tornado might not happen year after year, a slip and fall from a delivery person could very well happen. Talk to your agent about getting separate liability coverage for your home or ask about adding it onto your basic hazard policy if that is the route you decide to take.


The bottom line is, “going bare” is not the best route to saving you money when it comes to your insurance. Your rates might be high, but think of everything else that you would have to pay for if you did not have homeowners insurance. Unless you are independently wealthy and the cost to replace or repair your home is small compared to your net worth, it is not worth dropping. There is also another thing that often gets overlooked. If you drop your homeowners insurance now, there is a good chance that insurance companies will not want to cover you in the future. They will assume that you either did not meet your premiums in the past or you are anticipating a claim. Whatever they may think, you should expect your rates to be high.


For any additional questions, talk to your agent or give us a call! We want you to fully understand everything that goes on in your homeowners insurance policy.