The Expert Podcast

So, if you are facing a large insurance premium rate increase, you might be considering doing without homeowners insurance, what they call going bare, meaning that if you own your house for cash, you don't have a mortgage. You technically don't need to have homeowners insurance. And if you live in a disaster-prone area like where there's hurricanes or fires or earthquakes or hail, sometimes the rates for insurance get so high that you might just say, "I'm not having insurance." It's kind of risky. But there may be a way to offset some of that risk that we'll talk about in this video.

If you're considering going bare, be very, very cautious because if your house is destroyed or you have a serious loss, all the money comes out of pocket. And if you have millions in the bank that you just say, "I'll just rebuild my house," that's fine. Another option you could do instead of going bare is to raise your deductible to a very high amount. Instead of having a two or $5,000 deductible, see if you can get in a 20% deductible from your insurance company.

So on an $800,000 house, it might be a $160,000 deductible. The insurance company might lower your premium. Also take a look at whether or not your insurance company has other options for coverage, deleting some catastrophic but keeping some of the liability.

If you are deciding to go bare, as they say, and not have insurance, one option to offset or mitigate some of that loss is what's called a parametric policy. And we'll talk about it, but if you want more information, you can click the link below, riskcoage.com.

A parametric policy is a very simple standalone policy which gives you a flat amount of money if a certain event happens. It doesn't matter how much damage there is. They don't do any kind of claims adjusting. They just pay out a flat fee.

For example, if you buy parametric insurance for hurricane, let's say for a category 3 hurricane, if it comes within 40 miles of your house, they pay you $100,000. Or you can make anything you want. It could be a category 2 within 100 miles, they pay you $200,000, whatever. And it's a trigger-based event. If this thing happens, you get this much money.

It doesn't matter if your house is damaged. You can actually get the payout even if there's no damage to your property. So parametric could be a way to get at least some payout and not lose everything. It's not going to cover your entire loss. However, if you're going bare anyways, a parametric insurance policy might help offset some of the loss or maybe get you some living expenses for a year while you rebuild your house. Who knows?

Be aware that it's not the same as having coverage on your house. You have to make a very conscious decision to know what you're putting at risk, what your exposure is. You also want to look to make sure that you have proper liability insurance. So if somebody gets hurt on your property or you get sued, you have coverage for that. Parametric won't do it.

So once you've gotten to the point where you're just going to have no insurance anyways, well then look at a parametric policy. They're very cheap compared to other types of full coverage policies and it may be a way to not totally self-insure but have some kind of stop-loss built into your risk exposure.

To discuss this further, check with your agent, but they may not have too much experience or knowledge about this. You can click the link below risk coverage and we can talk about it in more detail.

Thank you for watching another video at actualhum.com and describe.tv. Remember if you have questions or comments about our videos, put them in the link below. Also remember that you have availability and access to live one-on-one question and answer consultation with a licensed expert in a number of fields: investigations, insurance, surety bonds, civil court mediation, even things like real estate records research, real estate brokers, real estate mortgage lenders.

In addition, you're going to find that experts are available in business segments, business development, marketing, advertising, certified licensed expert. So, if you do find this content valuable and you want to delve more deeply into a subject, you can't ask YouTube a question, right? But if you want to talk to somebody live, an actual human, use the link below.

Thanks for watching.