Dale's, No Fire or Other Building Insurance Plan.
For a long time, I was convinced that fire insurance was something that I couldn't possibly live without. Just about every home owner buys it and it is generally considered to be an inescapable cost that you'd be crazy to do without. I agree with that in most cases. Many people put all of their eggs in one basket when it comes to buildings. For many of us, the loss of our homes without insurance would cause financial calamity that we'd never recover from. I was certainly in that boat at one time, with 95% of my net worth tied up in a house. This house did not produce income but my family lived in it. If it had been lost and uninsured, that financial hit would have put us in the poor house.
Today, it's a little different. My land represents about 70% of everything I have and my bus along with other vehicles and my tools make up the other 30% of a pot that is not nearly as large as I'd like.
When I first bought the property, I had grand plans to build a huge house that would provide several thousand dollars per month in rental income. Banks have never been interested in me and to make a long story short, there is no way that they would finance a large owner built project built from materials produced from his demolition business. Insurance concerns are paramount to lenders and they considered the idea non insurable. I'm in a semi wilderness area served by a volunteer fire department with a record of long response times and this didn't help. The property sat for several years.
Now my plan is to develop the property incrementally with several buildings that will be useful in conjunction with my bus camping business and that serve the ultimate plan for the property to become a tourist destination. None of these buildings will be huge and all will be built with earthen plaster or stone exteriors and living roofs covered with soil and plants. This reduces fire risk. I won't put more than $10,000 into any individual building and they will be spaced so that a fire in one won't affect the others. Some structures will cost under $5,000.
My issue isn't the cost of the insurance, but rather the additional cost of building in a manner that suits the insurer. Policies generally cover a variety of perils including fire, flood, wind, earth quake,vandalism etc. Just about everything I want to do is considered unconventional and that's a red flag for insurers. I have complete confidence in my ability to produce structures that are at low risk on all counts and that are far less expensive to produce. So even if I was somehow able to get insurance on buildings built to suit myself only, I would be charged a rate that far exceeds my actual risk. The far greater risk is that projects do not happen due to the cost of trying to satisfy insurers and other paper pushers. -----------------------------------------------------------------------------------------------------------------
When I look at all of the risks that life presents, the statistical chance of losing a $10,000 structure is not something I'm going to lose sleep over. There are so many other bad things that could happen.-------------------
I could become disabled.
I could develop some incurable condition.
My business could fail.
I could make an ill advised marital or reproductive decision.
I could find myself in jail, should I get carried away in defending myself or my rights.
I could be murdered or maimed – My outspoken and confrontational nature puts me at much higher risk than your average citizen.
Any one of these fates could befall my children
And now the greatest risk of them all.--- I could spend a huge amount of my time and energy trying to conform to what society expects me to be and in the process allow various fears and risks to determine how I conduct the rest of my life. This would result in me getting too old to be of any practical use to myself, my family or society before accomplishing anything worthwhile. (I'd better stop here. This is about insurance, not a personal manifesto)
Compared to all of this, the potential loss of a few thousand dollars seems quite insignificant to me and I'm not willing to vastly increase my costs to mitigate that risk.
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I still plan to build that giant house, but not until the farm is providing regular income and I can at least get it up to frame and roofed without borrowing money. I will insure the house, since its loss would represent a greater financial hit than I'm willing to bear. I suppose after everything is built and operating, I will eventually seek insurance for everything on the property. If the price is right, I'll buy it, if not, I'll pass. By choosing to build without regard to how banks and insurers want to see it done , I stand to save a lot of money, probably much more than the cost of any individual structure other than the main house.
I will buy a general liability policy covering visitors.
That's all I've got concerning this issue. Tell me what you think about this or other insurance issues.
Thank you: Dale Hodgins – Belligerent Curmudgeon
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