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Adirondackwannabe's avatar

Brought to mind by the flood quesion, why would anyone cancel their flood insurance to save the $800 a year cost, incur $40,000 of damage from a flood, and then not get flood insurance?

Asked by Adirondackwannabe (36523points) April 17th, 2014

Welcome to my family. My stepfather has camp 30 feet from a major river. They got flooded out. They fixed it back up. And still don’t have insurance. Why would anyone be that tight to take that chance?

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14 Answers

fluthernutter's avatar

Maybe they’re hoping that lightening won’t strike twice?

You should probably tell them the same statistics do not apply to flooding and living by a river.

Tropical_Willie's avatar

C H E E P ! !

canidmajor's avatar

Perhaps your stepfather has financial issues that he has not shared with you.

LuckyGuy's avatar

Whenever I hear of someone making a decision that is so obviously wrong, I try to get inside their head to try and guess how they came up with the result. It is a game.
Here are 7 options that came to my mind:
1) B*stard insurnace companies never paid for that claim Pappy made back in 1954. I’ll be damned If I’ll give them money in 2014.
2) Sure the place flooded out 2 years ago but the weatherman said it was a 100 year rain that did it. I figure I’m good for another 100 years.
3) Insurance companies are only interested in making money for themselves. I can afford to self-insure my place if something happens.
4) I’m tired of paying the taxes, heat, water, electricity, phone line for my ingrate kids and their families who only show up one week a year to use it – after I bust my a$$ cleaning it up all year. If just one of them offered to put out a bunch of mouse traps and check them for a couple of weeks I’d be willing to invest a little cash.
5) I haven’t used the place since Hattie passed away in 2006. I don’t care what happens to it. I’ll let the kids worry about it.
6) The guy who developed Clint’s property up the road said my place was worth more as a tear down. I’ll let nature decide for me.
7) That big new flat screen TV I just bought sure was worth $800. Next year I might get one for the cottage.

How’d I do?

Adirondackwannabe's avatar

He’s not cheap, he redid the place beautifully. And he loves the place, he spends every minute there he can. He loves having people over too so that’s not an issue. I’m guessing it’s distrust of insurance companies, combined with his viewpoint. He knows 100 percent when he sends that $800 check in that that money is gone. But the chance of a flood is uncertain, so he’ll take his chances with the flood? But that $800 will pay for 50 years of coverage to reach $40,000. I guess I don’t get the risk reward payback.

SadieMartinPaul's avatar

Why would anyone go without health insurance, assuming that the person has access to and can afford the coverage? Such an individual is betting heavily that he/she will never get sick, suffer trauma, or become incapacitated. Why waste a few thousand dollars a year, believing that you won’t really need health care, when you can lose all your assets to hospitals and other medical providers?

Just ask my husband’s (formerly) wealthy friend who didn’t need to work and, thus, wasn’t covered by an employer plan. He never purchased health insurance; he gambled on his own invulnerability and didn’t want to pay for the premiums. The guy was diagnosed with Crohn’s Disease, became gravely ill, and lost everything.

Adirondackwannabe's avatar

A little different risk, but I see your point. Maybe my stepfather is willing to risk what he’s put into the place, knowing that’s the extent of the risk. With medical expenses everything is on the line. There’s no limit to your risk.

LuckyGuy's avatar

It looks like my answer #3 is closest : He is willing to self insure it rather than pay an insurance company. Very pragmatic.

Adirondackwannabe's avatar

@LuckyGuy Yeah, I’d agree with your assessment. He’s about as independent as they come. I just think he’s on the wrong side of the odds. But it’s his choice. He has to live with the results.

SadieMartinPaul's avatar

There are many reasons to recommend risk-shifting, because self-insurance has no risk limit. People so often trade full exposure in return for saving on insurance premiums. If the gamble pays off, fine; if not…

Adirondackwannabe's avatar

With medical insurance yes, there is no risk limit. In this case there is a risk limit. He just risks what he’s put into the place.

SadieMartinPaul's avatar

@Adirondackwannabe What if there’s a worse flood, which causes more extensive damage? What if the next flood is so powerful and devastating, it destroys the entire structure?

It’s true that his risk is limited to his property value (unlike medical costs and personal or professional liability, which are bottomless pits). But, all of the property’s at risk, not just his repairs and improvements.

Adirondackwannabe's avatar

The only major structure is the camp, so that’s all that’s really at risk is what I’m saying. There isn’t a lot there normally.

LuckyGuy's avatar

You wrote: “There isn’t a lot there normally.”
..And there’s that offer for the tear down – like they did up at Clint’s place. ;-)

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