Insurance shock

[BlackAkita]

[quote pid="346947" dateline="1710174375"]
Deductible???  We are not talking car insurance but homeowners insuirance, I looked thru all 22 small print pages and found nothing about a deductible.  Maybe it's there but i cannot find it.

[/quote]

It is about 7 months since we bought a home in LZ 2. We received a letter from HPIA that our fire-due-to-lava insurance premium would be around $4500/yr on $300,000 house value. A week later, we got a letter advising us that there were policy options with higher deductibles. I have not done the deep dive yet, because the third company to buy my mortgage (in under a year) is causing me to have trepidations of another sort. This lender has a tendency to squeeze extra costs out of borrowers, by forcing them to lower the deductible. If your current insurer does not offer this type of policy, the mortgage company on the mainland will force you to pay for a rider with their affiliated firm that covers the difference. You may have to shell out an additional 50% premium on the difference between, say the $5000 deductible you now have, and the one they demand, say $500. That would be $4500/2, or $2250.
I read somewhere that there are 1500 houses in LZ1 and LZ2. Is this correct, or an underestimate? I found one legislator who seems concerned, Greggor Ilagan:

https://repilagan.com/home-insurance-crisis/

Does he have any clout in the state? I can understand why owners would choose to self-insure, but doesn't this force you to pay off the mortgage completely?

[Punatang]

I can understand why owners would choose to self-insure, but doesn't this force you to pay off the mortgage completely?


Basically

[MyManao]

I can understand why owners would choose to self-insure..

What does that mean, exactly? 

For instance, if I am self insured, does that mean I do nothing and accept the consequences? Or is there some sort of structure, like setting aside enough money to cover the eventualities? I've had mortgages and paid conventional insurers, and had cash bought and did nothing.. but never heard of a structure where as a owner I would do something along the lines of establishing my own fund.

[terracore]

I can understand why owners would choose to self-insure..

What does that mean, exactly? 

For instance, if I am self insured, does that mean I do nothing and accept the consequences? Or is there some sort of structure, like setting aside enough money to cover the eventualities? I've had mortgages and paid conventional insurers, and had cash bought and did nothing.. but never heard of a structure where as a owner I would do something along the lines of establishing my own fund.

Self-insurance as a "thing", is generally only applicable on the liability side.  For example in Hawaii, one can fill out an application and deposit $300,000* (or use a surety bond) with the state and "self insure" their car to get out of paying liability insurance.  Of course this would be ridiculous because there are probably better things to spend $300k on than fist pumping in excitement every time a Geico commercial comes on because you "beat the system".  But this is to avoid the legal requirement to carry liability insurance.  Since one is unlikely to get drunk and drive their HPM 3/2 kit home (with a carport!) into a family of 6 on their way to church, liability insurance for homeowners is generally legally optional, but every lender requires it along with hazard insurance.  So you're right, self-insurance for a home in the raw sense is pretty much just "not having insurance" if one owns their home outright, but a financial advisor could help a person do this more intelligently, like setting up a structured investment so your "insurance fund" is making money instead of sitting under a mattress.  Over the years the fund may earn enough through interest and investments to pay for a roof, which you can use if a storm blows your roof off.  If that never happens, congratulations, you beat the system, and your heirs can spend your insurance fund buying huge new flatscreen TVs to watch insurance commercials and pump their fists in your memory.  

* I don't remember what the exact amount is because it's specific to each applicant.  Usually only businesses self-insure.

[Durian Fiend]

"If that never happens, congratulations, you beat the system, and your heirs can spend your insurance fund buying huge new flatscreen TVs to watch insurance commercials and pump their fists in your memory. "

LOL.  Is this what you anticipate your heirs doing?

With paid off homes in Puna, I suspect more owners participate in "malignant neglect".  They have no fund to cover costs for catastrophic events, nor do they actively maintain their homes.