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Comment by JKCalhoun | Hacker News Reader

Interesting. I wonder what the ramifications are if a significant number of people drop home insurance all together.

Home prices are so high there that I can only assume that, like California, you're essentially paying for the land, not so much the structure. It means your investment is not quite as at-risk as a home in another state.

If we built less-expensive homes perhaps home insurance need not be a thing at all.

But since in theory the prices of insurance takes into account that the risk is being spread around the insurance pool, would a significant number of people leaving that pool cause it to go up more for those remaining?

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Banks require insurance to get a mortgage. Increased borrowing costs (effectively) will reduce what people can afford and lower the value of the land (and house).

People do live in places where you can't get a mortgage. For example, I'm thinking of a rather sparse community on the big island in Hawaii that's on the side of a volcano. However, both the land and the structures people build are much cheaper.

It seems like in the limit, it's basically like a campground, and if you need to move then you move.

> I wonder what the ramifications are if a significant number of people drop home insurance all together.

As long as there's a mortgage, people will be required to carry home insurance. I have heard of the wealthy self insuring because the premiums were so high. For them it made sense to invest premiums instead.

Unfortunately its not just the land. Construction prices are through the roof still compared historically.

Agree though that it would be nice to build simpler homes.

Most mortgagers require home insurance as part of the loan terms. They will increase your monthly payment due to offset the risk of their stake in your property. It's like paying for insurance, without any of the benefits.

You are required to carry home insurance as part of having a mortgage. If you own outright, you can choose to drop it. If you still have a mortgage, though, the mortgage holder can foreclose if you stop carrying home insurance.

Disclaimer: I don't do mortgage law. This is just my impression from having read the mortgage contracts I have signed.

Most of the banks I have seen have a clause allowing them to buy insurance that covers what you owe -and usually costs more than what you would pay for full private insureance- and bill it back to you... if you don't make the full payments, then the bank will foreclose. So there is usually that extra step of them taking out a policy.

It would be interesting to hear from an expert, I would think it would cause the pool to be more volatile, but not necessarily more expensive?

not an expert but the insurance companies need re-insurance sometimes which adds costs. the worst thing you can do is concentrate your risk. then one event could wipe you out.

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