After years of shoveling cash into my big name national insurance company and no claims, I was rewarded by finding out they had raised my premiums by another 52% this year because, well they had no real reason. They just wanted to turn up the taps.

I then happened to come across a site with reviews online where I was rather dismayed to see this well known agency had a string of one star reviews dating all the way back to 2018- all claims they backed out of or denied.

They also gave me the run around once- I had bundled my auto insurance with them. I had a rear windshield explode due to the cold, and when I called about filing a claim they not only worked it out so I would pay 4x as much to have it fixed, but it would all come out of my pocket and wouldn't cost them anything. I refused to file a claim.

And they put it on my record ANYWAY.

In other words... when I tried to go to another insurance company for auto insurance, they found my phone call filed as a claim on my record, and so raised their own premium quotes.

Sound frustrating? It sure is.

Anwyay the writing sure looks to be on the wall- I better start the long and painful process of insurance shopping, going through inspections, the back and forth, waiting and reviewing and on. It is hugely time consuming at least for me, don't know how it is for anyone else.

I've pretty much been paying this company for nothing but peace mind- and I'm not even getting that. They are constantly upsetting me with raising their rates.

And I'm not the only one. When I called my mortgage bank, they commented that "50% premium hikes are happening all over the place this year."

I said really, can you recommend a good insurance company then, since you deal with them all the time.

No, she says. I understand your struggle, but its YOUR struggle. Sorry, no help.

She wouldn't even refer me to a better deal! Talk about cold.

Then I had an idea.

What if I DON'T struggle.

What if I just start putting my insurance premiums instead into an interest bearing account, and just rack up an ever mounting cushion of savings.

Then it would be my money, and I would always be approved to use it.

Most problems with rentals, even fires they pretty much fenagle it so it comes out of your deductible, or find a way to deny your coverage.

The old fashioned, put your cash under your mattress, as opposed to giving it all to and trusting private insurance companies which at least in the U.S., seem little better than a criminal racket.

Anybody have thoughts on this?

Let me make clear what I'm talking about:

Property insurance for rentals.

You can't get out of insuring your car of course. Or in my case my home, since I have mortgage.

But my rental building is paid for. Why not just put those premiums into an interest bearing bank account instead of giving it all to an insurance company?

Has anybody done this?

I carry liability only on some of my single family homes that are free and clear.

I don't even stack the money back.

Unlikely something's gonna take 'em all down.

(tornado is prolly likeliest thing round here)

I've had the same problems over the past few years. Most of my places are C types, and older mobile homes. They were acquired at very low prices, usually because they needed work. When I started, insurance prices were fairly low because the value of the places was low. Now, not so much. Raises every year and the last few years, higher raises.

When there was damage to the units the insurance companies either denied responsibility saying "lack of or deferred maintenance" or they depreciated it to the point where the deductible was more than they were willing to pay. So I dropped insurance on most of them.This created a problem with the liability part of it and how to deal with that. So then it's LLC's, trusts, etc. Separating things in case something happens.

cubeX,

In my 46 years and close to 200 SFHs we've had 6 "small" fires and 53 roofs after a hailstorm.

I have yet to USE the money I paid State Farm.

I only recommend self insuring for high dollar pros with tons in savings, not casual LLs.

Yes, every time you call to ASK it goes on your property's record. Even when your resident calls their rental ins co it goes on that property.

An atty on YouTube ranks ins based on his dealings.

1. Chubb

2. State Farm

3. ?

4. Farmers / AutoOwners

I also find the local rep can make a big difference so interview a few.

BRAD

Insurance companies don't link your claims to your phone number. They do link them and load that data into the CLUE data base. Clue stands for Comprehensive Loss Underwriting Exchange.

So if you have filed claims in the past (or for the sake of 100% fairness, they believe you have), in Pa you can self insure your properties.

What you're asking about is what is casually referred to as "going naked" in the insurance industry. Dropping coverage and self-insuring.

The question is, what if you drop coverage and next week a tornado levels your building? How do you recover? Do you recover? Are you out of luck and just stepped over thousands of dollars to pick up a penny?

As Brad said, people who are flush with cash can attempt this strategy, but it is a roll of the dice.

An older gentleman in my town who was a builder and owned 200+ properties used this strategy. I bought several places from him that he inherited from his father. In addition to his local rentals, he also had built and owned the "Head Start" schools in 13 surrounding communities. He had commercial, residential, etc. The man was wealthy beyond anyone I'd ever met and personally done business with. I roughly estimate his net worth around $20 million.... this was in 2015.

He told me he never bought insurance. Waste of money, he said. In his time, he admitted he'd had 3 fires (total loss) and paid out $50,000 to settle one liability claim. Probably about $300,000 lost in about 40 years.

I took a SWAG (scientific wild a** guess) at his savings based on the kinds and numbers of properties he had. I came up with $3 million. Clearly, he did okay. He had many properties, diversified over a wide area. Even if a tornado hit my town and flattened every one of his residential houses, he'd still have all of his Head Start buildings in surrounding communities.

You have one building in one area. What's your break even? How many years of premiums must you bank with no claims to offset a total loss?

A very old problem that everyone has created.

How do you stop it? Just say NO.

Years ago I raised the deductible to 10%, that lowered my premium by 50%. I also have an independent agent shop the policy for me every couple of years. That lowered it another 50%. Liability is important to maintain but the savings happen when you self insure the smaller stuff (small fires, hail repairs, etc) by raising deductibles.

I raised my deductibles as well to save money.

Figured that as long as I kept up on maintenance I would be good to go. I pay too much but I am afraid to go the self insured route.

If I lose a place completely I will be fine. The small stuff I never turned into insurance anyhow. Replaced something like eight roofs a couple years back and I should be good on them for the rest of my life, barring a tornado or seriously large hail.

@S i d [MO] & others:

Here's my thing:

When that tornado hits, or that devastating accident happens, how do you KNOW your insurer is even going to pay?

How do you know they're not going to collect your premiums all those years, and deny your claim anyway.

That is the point I'm at now.

I won't hold back. My current insurer is Country Financial.

I just read a page of reviews on them all one stars.... people denied claims. One person calling them basically a fake insurance company.

I feel as if being insured with them at this point, is basically paying for nothing if I have no assurance they will actually pay when I have a disaster.

The points about liability are of course, valid.

If I were to "go naked" I would assume having liability is the way to go. Even though many insurance companies are wise to this and charge almost as much for liability as comprehensive.

But again.....

Say the tenant falls on the stairs and sues you for a million dollars.

How do you know your insurance company will even pay the claim, instead of saying "You didn't Thompsons Water Seal the deck stairs, claim denied."

???

Case in point: the majority of homes destroyed by hurricane Helene were insured...but not for floods. So insurance is paying NOTHING. Who would have thought you would need flood insurance in an area that had never in history flooded?

Anyway, I run with bare minimal insurance. If the insurance companies were not making big money on policies, they wouldn't sell them. That tells you you can (statistically) save money by running naked. But then there's that catastrophic event...but will they pay?

We are self-insured for earthquakes in California. This is because no private insurers will touch earthquake insurance. A government agency is the only one that will insure against earthquakes, and a clause in the policy says that if they get a lot of claims all at once, they reserve the right not to pay out on them, even if they are all valid. The situation where this is likely to happen is.... when there's a big earthquake! So what's the point?