BiggerPockets

If you don't buy insurance you are "self insuring." This likely makes sense for you Rich given that you can stomach the downside risk. I don't know anything about the models they use, but my guess is that it has to do with actuarial models of some sort, which are pretty complicated.

John T. Reed has a book that discusses which insurance choices are the best. I will see if I can find the book for you. I remember reading it a while back, but much of the content didn't apply for me so I didn't study it too much. It may prove helpful for you though Rich.

Rich, I have had the same delima as well. Long ago, I as an agent, I helped put together a self insured plan for a small municipality. It boild down to the fire protection class code in the area, how quickly will the fire department respond to a fire, their ability to save the property and what the extent of damage may be. Translating that into a dollar loss you can decide what premiums are worth. However, many companies will not write liability coverage for a property without having casualty coverage as well. Liability is the problem, not fire, IMO.

Currently, I'm spending money for coverage on properties that are not encumbered. One is in an area served by community volunteer fire department and having watched these guys respond reminded me of the Keystone Cops, so it's insured at about 85% of the cost to replace it.

Insurance policies have a co-insurance clause that reduces the amount they will insure in the event you are under insured, it is assumed that you have co-insured the property. To stay away from this you need to have properties insured at or above 80% of the replacement value. Turns out, that is about the best you can do for the premium dollars spent (wasted, lol). Since insurance companies value properties at the replacement value, by region and not what you can replace it for, many properties are really over insured, IMO. Trying to have a policy at the 80% mark will likely get you into a problem in the even of a claim as the company will likely try to establish your position as being co-insured based on the then, present values. I have done mine at 85%, allowing a fudge factor. There is not much difference, but the difference on several properties pays for the insurance on one of my toys, so the insurance guy gets it anyway! LOL
Have a great and safe weekend! Bill

Rich, I generally get better assessments when I mention moving all of my business. I have also reminded them that I have the Insurance Commissioner's phone number. Rate it at the replacement value of improvements only! Good luck, Bill

I'm amazed at the wide variation in prices between insurance companies as well. I get quotes on my policies regularly to insure that I'm paying the best price I can.

It seems to help when they know you might move your business else where.

Take a real good look at your "Insurance Policy" sometime. Up front they have a section labeled "What is Covered" then in the back is another section called "What is Not Covereed". If you read through both of them, you will see that everything they say is covered in the first section is also listed in the not covered section. What is the use of having a policy like this??

I shop all of my insurance. I have seen many times where they offer a low rate one year and raise it significantly the next. It is easy to assume that all companies have done this. The fact is that is not always the case. After getting new quotes it is not uncommon for me to find that new or old insurers have better deals.

One thing I always keep in mind. Is what am I insuring. For real estate the greatest risk is liability claims IMO. I generally carry the highest deductible possible, because I've never had claims and replacement isn't my real purpose for the insurance.

Another good point Charles, use the deductable to lower premiums, that work well in some areas I know. In my area there is not much difference if you expect a claim in 5 to 7 years. Fire is not a worry for me really, it's tonado/stom damage. We have plenty of hail storms that will do in a roof in short order. I have never had a major claim, a total loss, but I have had many small losses as do most people in this area. A $150 a year difference is not much if you have a $3,000 loss twice a decade. Bill

Rich, I think they are required to use Marshal Swit to assess replacement costs...have a great evening, I'm disposing of 15 class "c" shells for the GKs, lots of Ouuus and Ahhhhs! Nothing like burning money! LOL Be safe....Bill

Many insurance companies make underwriting losses and make up for that by investing the float. If you shop around, you may be able to find insurance that is not more expensive than the long-term cost of self-insurance (considering the small but real probability of a fire).

in-sur-ance (in' shOo rəns), 1. n. a widespread legal form of gambling where the 'house' may raise antes in response to excessive pay outs and/or utilize several forms of double-speak and legal-eze to welch on the 'bet' altogether.