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The Dangers of Going Without Home Insurance

July 28, 2012 12 Comments

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The following is a guest story, long time back I wrote about safeguarding your money from disasters. The story reminds me of the hurricane damage we faced in 2005, here in south Florida. Here’s what happened in Ireland, there are lessons in the story, enjoy reading!

The Quigley family was enjoying a pleasant November evening when disaster struck. It began when they were distracted by the barking of a stray dog in the backyard. As the family returned to their living room, they realized that a fire in the fireplace had gotten out of control. A loud roaring sound confirmed the presence of a chimney fire.

Patrick Quigley threw baking soda on the flames, and Sheila called the local fire brigade. The fire truck took about 15 minutes to arrive. Firefighters sprayed the house with water, but it was too late to prevent damage to the roof. The fire also destroyed an attic fan. After searching the attic for leftover embers, the fire brigade departed.

The family did not have home insurance. It would cost a great deal of money to repair the roof and replace the attic fan. Sheila had lost her job a few months earlier, so Patrick was burdened with the full expense. He could not afford to pay a contractor to fix the roof until his next paycheck arrived. It wasn’t due for almost two weeks.

A few days later, heavy rain began to fall. The roof leaked, causing further damage to the house and forcing one of the children to sleep on a couch. Meanwhile, Sheila received a bill from the fire brigade. It requested a fee of 350 euros. Patrick decided to obtain a high-interest loan from a moneylender.

Related  – how to prevent financial disaster

With the help of this loan and 80 euros from a neighbor, the family was able to pay a contractor for the repairs. They decided to replace the attic fan later. Until Patrick received his paycheck, Sheila had to cut back on grocery purchases and put off paying several bills. The situation was rather stressful for the entire family.

After his paycheck arrived, Patrick sent a payment to the local fire brigade and repaid the moneylender. The interest on the loan amounted to 120 euros. After paying so much money to the fire brigade and the moneylender, the family still had to carefully limit their spending for the next two weeks.

This story reveals the importance of having home insurance. If the Quigley family had obtained home coverage, it would have paid for the repairs, the attic fan and the fire brigade fee. The value of a house is used to determine home insurance rates, so almost anyone can afford this type of policy.

Are you insured for your home? If not, you must have it, Insurance is your financial defense.

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Comments

  1. Lance @ Money Life and More says

    July 28, 2012 at 11:17 AM

    I have a mortgage so I’m required to have insurance but I would have it anyway. I don’t want to spend as much as it would cost to rebuild it and would rather just pay insurance every year.

    Reply
  2. Donny @ Extreme Money Saving says

    July 28, 2012 at 11:50 AM

    Is home insurance something that no home owner should ever go without, or, is it a waste of money for the majority of people. That is the question. Personally, I think the latter. Having said that, would I feel differently if my house caught on fire? It’s easy for me to say no now, but I think it’s a pretty safe gamble that it’s not going to happen. Conversely, I also have a friend whose house burn down. His house was insured, so it definitely paid off for him.

    What are the odds that your house is going to catch on fire? According to http://wiki.answers.com, the odds of your house catching on fire are about 9 to 1, or 10%. Also, according to http://wiki.answers.com, the odds of your house burning down are about 8%, and that number seems a little high to me. If those numbers are correct, that means over 90% of people who purchase home insurance are going to be paying thousands of dollars to the insurance company and are never going to get a penny of that money back. Statistically, going without home insurance seems like a pretty safe bet to me.

    If you’re one of the unfortunate small minority whose home does suffer from fire damage, how much is the insurance company actually going to pay you? More specifically, will the level of coverage you purchased adequately cover the damages you incur or cover it at all? There’s a myriad of levels of insurance coverage available, so if you’re not careful in making your selection, it might cover that much. The amount money you get from the insurance company might be significantly more than the amount of money you paid into your insurance. Perhaps you would have been better off simply having your own emergency fund rather than paying off some insurance company for years on end.

    Reply
    • Edward Antrobus says

      July 29, 2012 at 10:42 AM

      A cousin of mine had her house burn down. Her insurance wouldn’t pay unless that built a LARGER house than what they had. They now have a completely unused wing to their house just so they could rebuild in the first place.

      Reply
      • Donny @ Extreme Money Saving says

        July 29, 2012 at 12:02 PM

        That’s what I’m talking about. It’s a criminal racket, and in the instance when you need them to actually pay up, that’s freqnently the sort of thing that happens. There’s some loophole, something in the fine print, or some special condition with the purpose of exempting them them from paying up. It’s not easy to get your money, and if they do pay, they’ll probably end up paying less than what you were led to believe they would pay.

        Reply
  3. Mike @ Money Advice Online says

    August 1, 2012 at 8:17 AM

    Reading this has reminded me I need to renew my bricks and mortar insurance and as Lance pointed out, its mandatory if you have a mortgage on your property. I don’t really bother with content insurance as I don’t really have anything that expensive in my home…

    Reply
  4. Nicolette says

    August 24, 2012 at 6:50 AM

    Really insurance is best for our life. Insuring your house will help you protect your house against the expenses incurred to repair your house in the event of a fire accident, earthquake or even burglary.

    Reply
  5. Abilena says

    August 24, 2012 at 6:57 AM

    By reading this article each person who are living in own house should take the home insurance to save home from nature disaster. Insurance will pay compensation for the damage

    Reply
    • SB says

      August 24, 2012 at 7:35 AM

      Yes, insurance is defense! It protects your wealth in exchange of small money.

      Reply
  6. Florida PIP says

    September 29, 2012 at 12:13 PM

    I couldn’t imagine taking that kind of loss. You just have to keep that home insured. Your home, in most cases, is going to be your greatest asset.

    Reply
    • SB says

      September 29, 2012 at 11:08 PM

      No argument against this theory

      Reply
  7. Dejan says

    February 26, 2016 at 4:05 AM

    Great and informative post

    Reply
    • SB says

      March 2, 2016 at 7:54 AM

      Do you have home insurance?

      Reply

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