vania-janet/multiturn-rag-retrieval-data huggingface dataset:
"While a lot of the answers focus on cost to replace and how much money you should have for tangible goods. There are a few more issues to consider. However before we get started, these issues are not related to ones net worth. They are related to other factors. Having money certainly helps, but someone worth only $10 may not need to insure their stuff under some circumstances. Insurance is a risk avoidance strategy. As such, it should be used to avoid risks that would otherwise cause issues for you. The normal example is a house. If you lost your house due to fire, would you be able to ""make it"" while you paid the mortgage off, and got a new mortgage to pay for a new house? This is a relatively simple view, but a good one. These days people tend to look at insurance as a savings account. I payed in X so I am entitled to Y. Heath insurance (a bit more on this later) is exacerbating the issue by selling it's self that way, but it simply isn't true. What your paying the premium for to avoid the risk of loss. Not so you can have a pool of money to draw from in time of need, but so that a time of need should never arise. Which brings us back to, should you get insurance? Tangible Assets Let's assume you have no legal or contractual obligation to have insurance. If you put the money you were spending aside would you have enough money to secure a new asset should your current one just vanish? This is the normal argument. But it has a second side. Do you need the asset at all, or can you just accept the loss. Lets pick on a red neck for a second. While certainly not millionaires, or ""well off"" by conventional means, the guy with 6 cars on bricks in his lawn does not need to insure 6 cars. If one were to vanish, it may make a hardship but hey, he's got 5 more. So with tangible goods it's more of a question of can you afford to replace the item, do you need to replace the item, and how big a risk is it to you to loose the item?
Short answer is yes, all the firms are required to keep enough resources on hand to pay claims that may arise from even extreme events like the recent hurricanes.  Insurance firms are rated based on their claims-paying ability and it is absolutely critical for them to maintain enough cushion to pay claims.  If insureds lose confidence, they won't be able to write any more business, and they are done.  In addition, to manage tail risks, primary insurers like Allstate will often purchase reinsurance.  So, for example, Allstate might go to Swiss Re and buy a policy that kicks in once Allstate's liability exceeds $5bn for a given event.
So you've got to save about $70 a month towards repairs, etc. for the case of every 10-50 years when you need a new roof and so on. Many experts suggest having the maintenance money in savings on top of your emergency fund from day one of ownership in case your water heater suddenly dies or your roof starts leaking. Make sure you've also estimated closing costs on this house, or that the seller will pay your costs. Otherwise you loose part of that from your down payment or other savings. Once you add up all those numbers you can figure out if buying is a good proposition. With the plan to stay put for five years, it sounds like it truly might be. I'm not arguing against it, just laying out all the factors for you. The NYT Rent Versus Buy calculator lays out most of these items in terms of renting or buying, and might help you make that decision. EDIT: As Tim noted in the comments below, real monthly cost should take into account deductions from mortgage interest and property tax paid. This calculator can help you figure that out. This question will be one to watch for answers on how to calculate cost and return on home buying, with the answer by mbhunter being an important qualification
Related to above, at that level of mortgage/salary you have very little margin for error if either of you lose jobs etc. Houses are much more expensive to maintain/trade than most people think. You spend ~2-5% every time you buy and sell, and you can easily spend 2-20k+ a year depending what happens just keeping the thing watertight, paid for, liveable and staying up. You need to factor this in and be pessimistic when you do. Most people don't factor in these costs to the apparent 'index' rise in house values and what they expect to sell for in x years. In reality no buy and hold investor can ever realise even close to the quoted house price returns as they are basically stocks you have to pay 5% each time you buy or sell and then 1-20% percent a year to own - they have to rise dramatically over time for you to even break even after all the costs. In general you should buy homes to make memories, not money, and to buy them at prices that don't cause you sleepless nights in case of disasters.
For example, it is not allowed to buy flood insurance at peak flood season and then cancel it when it is over. They are not offering this right now. So it would be interesting to see if they offer this and how they offer this. For example, you can insure your camera for a week when you are going on vacation. They call it on-demand insurance. They segment Trov is targeting consumer electronics. More often people don't take insurance in this segment as the insurance cost is high and benefits low. However if going on vacation, most are afraid of loosing / damaging equipments. Generally although we are afraid, most often nothing happens. It is this segment; you make the insurance cheap and easy to buy and create a new segment.  Insurance fraud detection is an important part of insurance process such that insurance companies allocate a lot of resources to detect improper insurance claims. The website does not mention how they process claims. Although it looks easy, they may have a more stringent process. For example what is stopping me from buying an insurance after event; i.e. break my phone Monday, buy insurance on Monday and make a claim on Tuesday saying the phone broke on Tuesday.
Say you take this job at the other end of the country, or you become a parent of four and need more space. At the time you decide to sell, the market may have gone down due to the overall state of the economy, or to the house location's popularity, or your own house may have turned undesirable (what if you get a mold infestation which would only go away if you strip it to the concrete and rebuild?) You could let it to renters, but that's a hassle of its own. It takes time to find renters, it may be expensive (income tax, regulations like Energieausweis in Germany), it is risky (if they don't pay, you might not see money even if you sue them). Then there is the problem that prices reflect not some kind of ""true"" value, but the intersection of supply and demand. And the home market is not as efficient as in a first semester microeconomics textbook. The buyers of private homes deal in small volumes, have little knowledge in the market, pay intermediaries' cuts, and are emotionally attached to the idea of ""owning my own house"". This drives demand up and creates higher prices than if you had perfectly rational actors on both sides. People pay money for the feeling of being home owners, so those who forego spending on that feeling have more money to invest in something else. Owning something always causes expenses. You have to calculate the savings of having the house vs. the expenses of having it, before you can decide if it is a good deal or not. If you only calculate one side of the equation, you'll be badly mistaken."
Don't buy a house as an investment; buy it if/because it's the housing you want to live in. Don't improve a house as an investment; improve it if/because that makes it more comfortable for you to live in it. It's a minor miracle when a home improvement pays back anything close to what it cost you, unless there are specific things that really need to be done (or undone), or its design has serious cosmetic or functional issues that might drive away potential buyers. A bit of websearching will find you much more realistic estimates of typical/average payback on home improvements. Remember that contractors are tempted to overestimate this. (The contractor I've used, who seems to be fairly trustworthy, doesn't report much more than 60% for any of the common renovations. And yes, that's really 60%, not 160%.)
"The general answer to any ""is it worth it"" insurance question is ""no,"" because the insurance company is making a profit on the insurance.* To decide if you want the insurance, you need to figure out how much you can afford to pay if something happens, how much they cover, and how badly you want to transfer your risk to them. If you won't have trouble coming up with the $4000 deductible should you need to, then don't get this extra insurance. * I did not mean to imply that insurance is always a bad idea or that insurance companies are cheating their customers. Please let me explain further. When you buy any product from a business, that business is making a profit. And there is nothing wrong with that at all. They are providing a service and should be compensated for their efforts. Insurance companies also provide a service, but unlike other types of businesses, their product is monetary. You pay them money now, and they might pay you money later. If they pay you more money then you spent, you came out ahead, and if you spend more money then they give you, it was a loss for you. In order for the insurance company to make a profit, they need to bring in more money than they pay out. In fact, they need to bring in a lot more money then they pay out, because in addition to their profit, they have all the overhead of running a business. As a result, on average, you will come out behind when you purchase insurance. This means that when you are on the fence about whether or not to purchase any insurance product, the default choice should be ""no."" On average, you are financially better off without insurance. Now, that doesn't mean you should never buy insurance. As mentioned by commenter @xiaomy, insurance companies spread risk across all of their customers. If I am in a situation where I have a risk of financial ruin in a certain circumstance, I can eliminate that risk by purchasing insurance. For example, I have term life insurance, because if I were to pass away, it would be financially catastrophic for my family. (I'm hoping that the insurance company makes 100% profit on that deal!)
There are two scenarios that I see. You have a mortgage on the property. Generally the insurance company sends the funds to the lender, who then releases the funds to you  as you make the repairs. They do it this way because if you never make the repairs the value of the collateral is decreased, and the lender wants to protect their investment. There is no mortgage. You will get the funds directly, and the insurance company will not force you to make the repairs especially if the repairs are cosmetic in nature.  In either case if you don't fix the cause of the leak, and make repairs to the site around the leak, you will run into a problem in the future if the leak continues, or the rot and mold continues to spread.  If you file a future claim they are likely to ask for proof of the original repair. If you didn't make it, they are likely to deny the second claim. They will say the cause is the original incident and if you had made the repair, the second incident wouldn't have happened. They are likely to drop you at that point. If you try to sell the house you will have to disclose the original leak, and the potential buyers will want you to make the repairs. Any mold or rot spotted by the home inspector will be a big issue for them. It is also likely to be an item that they will be advised to demand that you get a legitimate company to make the repair before the deal can move forward, and won't negotiate a lower price or a credit for $x so they can get the repair done. Some will just cancel the deal based on the inspection report.
Keep in mind that if you choose a loan for the boat, you may be required by the lender to maintain a minimum coverage of insurance during the term of the loan. Further, some states require you to carry some level of liability insurance on your boat, and some entities require liability insurance when using certain bodies of water within their jurisdiction. If neither apply to you, and if you could suffer the loss of the boat itself, could you similarly suffer the damages caused by your boat if you lose control?  Let's say you hit a much larger, more expensive boat, or your boat breaks free from it's dock and damages the dock well beyond the cost of your boat. Are you also able to withstand these costs? If not, you may want to invest in minimum liability insurance. If, at this point, you are still convinced that you are not at financial risk due to the boat, I'd strongly suggest a plan of self insurance.  Take the money you would normally spend on insurance, and invest it in low risk investments that can be liquidated in a matter of months.  If you do have a problem with the boat, your risk is mitigated by the self-insurance.  If you don't, then you have not only saved that money, but increased its value.
"Note: I am making a USA-assumption here; keep in mind this answer doesn't necessarily apply to all countries (or even states in the USA). You asked two questions: I'm looking to buy a property. I do not want to take a risk on this property. Its sole purpose is to provide me with a place to live. How would I go about hedging against increasing interest rates, to counter the increasing mortgage costs? To counter increasing interest rates, obtaining a fixed interest rate on a mortgage is the answer, if that's available. As far as costs for a mortgage, that depends, as mortgages are tied to the value of the property/home. If you want a place to live, a piece of property, and want to hedge against possible rising interest rates, a fixed mortgage would work for these goals. Ideally I'd like to not lose money on my property, seeing as I will be borrowing 95% of the property's value. So, I'd like to hedge against interest rates and falling property prices in order to have a risk neutral position on my property. Now we have a different issue. For instance, if someone had opened a fixed mortgage on a home for $500,000, and the housing value plummeted 50% (or more), the person may still have a fixed interest rate protecting the person from higher rates, but that doesn't protect the property value. In addition to that, if the person needed to move for a job, that person would face a difficult choice: move and sell at a loss, or move and rent and face some complications. Renting is generally a good idea for people who (1) have not determined if they'll be in an area for more than 5-10 years, (2) want the flexibility to move if their living costs rises (which may be an issue if they lose wages), (3) don't want to pay property taxes (varies by state), homeowner's insurance, or maintenance costs, (4) enjoy regular negotiation (something which renters can do before re-signing a lease or looking for a new place to live).
Yes. My parents bought it quite a while ago; my father ended up in Alzheimer's care, and my mother needed full-time care for a couple of years. The long-term care insurance paid a significant amount of money; for my mother, it was something around $60K.
My experience with owning a home is that its like putting down roots and can be like an anchor holding you to an area.  Before considering whether you can financially own a home consider some of the other implications. Once you own it you are stuck for awhile and cannot quickly move away like you can with renting.  So if a better job opportunity comes up or your employer moves you to another office across town that doubles your commute time, you'll be regretting the home purchase as it will be a barrier to moving to a more convenient location.   I, along with my fiancée and two children, are being forced to move out of my parents home ASAP.  Do not rush buying a home.  Take your time and find what you want.  I made the mistake once of buying a home thinking I could take on some DIY remodeling to correct some features I wasn't fond of.  Life intervenes and finding extra time for DIY house updates doesn't come easy, especially with children.   Speaking of children, consider the school district when buying a home too.  Often times homes in good school districts cost more.  If you don't consider the school district now, then you may be faced with a difficult decision when the kids start school.   IF you are confident you won't want to move anytime soon and can find a house you like and want to jump into home ownership there are some programs that can help first time buyers, but they can require some effort on your part.  FHA has a first time buyer program with a 3.5% down payment.  You will need to search for a lender that offers FHA loans and work with them.  FHA covers this program by charging mortgage insurance every month that's part of your house payment. Fannie Mae has the HomeReady program where first time home buyers can purchase a foreclosed home from their inventory for as little as 3% down and possibly get up to 3% from the seller to apply toward closing costs.  Private mortgage insurance (PMI) is required with this program too.  Their inventory of homes can be found on the https://www.homepath.com/ website. There is also NACA, which requires attending workshops and creating a detailed plan to prove you're ready for homeownership.  This might be a good option if they have workshops in your area and you want to talk with someone in person. https://www.naca.com/about/
Why doesn't it seem right to you? The lender financed the house and has the first right claim (mortgage) on it, so if you have any insurance proceeds they're first offsetting your debt to the lender. Same as if you were selling the house - first the loan is paid off, whatever is left goes to you. If the property is not lost, then the proceeds are going to you and you keep paying the mortgage. So if a pipe burst and you need to replace the flooring, the insurance will cover it, and you'll get the proceeds. If the building is lost and you're paid the fair market/rebuild value, then you first need to pay off the mortgage. Its standard.
Plus, there's the feeling my parents want me to have a house in case   we can't save the one we (my mom and brothers) all live in. First, you should not be forced to buy a home because your parents are telling you to. You should have your own life. Period. That said, while you are doing well from a salary perspective, your savings are somewhat borderline for a purchase if you ask me. Meaning your savings would essentially be the full downpayment & then your whole paycheck basically becomes payments on the mortgage. Not a good situation to be in. My advice would be that if you can invest in something smaller—like a small apartment for yourself—that is what you should purchase.  That would allow you to invest in something but not be completely financially drained by the prospect. And then in a few years, you can sell that apartment & move onto something else.  Perhaps a house at that stage? But right now, a full home purchase would be a fairly massive risk.
Apart from legal requirements to have insurance, e.g. 3rd party car that other answers have covered well. We can think of all insurance as protecting our “usable” income, as we can use cashflow to pay the costs of a loan to replace whatever we decided not to insure.    So for example, if I don’t insure my house contents, I can replace them on my credit card if needed. Therefore we are paying for insurance out of our income, so as to protect our income, knowing that the cost of the protection is on average more than the benefit we get from it. But we all know that having an income of $50K is less than double the value of having an income of $25K.   (E.g. being able to eat and remain warm is more important to us then being able to go on anther holiday.)  This is way when someone has a higher income; it requires more money to effect their actions. Loss aversion is another factor; we are people not logistical machines.
"The long and short of it is, the mortgage company has a significant interest in the resale value of the home in the event of a default.  Imagine a scenario where you say to yourselves that you're not going to repair the deck just yet (""meh, we'll do that next summer"") and something happens that causes a default on the mortgage. The resale value of the home may be harmed by the deck, even though you're willing to live with it.  That being the case, the mortgage company has every right to insist that you carry out the repairs in order to maintain the property in salable condition, so the essence of it is, you don't have much choice but to do the repairs. Keep in mind too that the insurance company paid for the roof and the deck to be repaired.  If they were to learn that you now have no intention of using the money to repair the property, you could end up in legal hot water with them.  After all, you did accept the check for repairs that you're now not carrying out."
In October 2011 in the United States, you just don't have any options.  Save your money in a savings account and that is the best you can do.  Your desire to buy a house means you are a saver not an investor, and you risk tolerance on this pile of money is 0. Save it in a bank account; I highly doubt chasing an interest rate will pay off with any significance. (being highly dependent on your opinion of significant)
Also if you decide to cancel the policy after 20 years, you will not have overpaid for the level of coverage provided. Finally, in addition to a policy with larger face value, I recommend that you include the mortgage (if any) on your house in the amount that you decide is enough for your family to live on and to send the kids to college, etc., or get a separate (term life insurance) policy to cover the mortgage on your home. Many mortgage contracts have clauses to the effect that the entire principal owed becomes immediately due if either of the borrowers dies. Yes, the widow or widower can get a replacement mortgage, or prove to the lender that the monthly payments will continue as before, (or pay off the mortgage from that $150K or $400K which will leave a heck of a lot less for the family to survive on) etc., but in the middle of dealing with all the hassles created by a death in the family, this is one headache that can be taken care of now. The advantage of including the mortgage amount in a single policy that will support the family when you are gone is that you get a bit of a break; the sum of the annual premiums on ten policies for $100K is more than the premiums for a single $1M policy. There is also the consideration that the principal owed on the mortgage declines over the years (very slowly at first, though) and so there will be more money available for living expenses in later years. Alternatively, consider a special term life insurance policy geared towards mortgage coverage. The face value of this policy reduces each year to match the amount still due on the mortgage. Note that you may already have such a policy in place because the lender has insisted on you getting such a policy as a condition for issuing the loan. In this case, keep in mind that not only is the lender the beneficiary of such a policy, but if you bought the policy through the lender, you are providing extra profit to the lender; you can get a similar policy at lower premiums on the open market than the policy that your lender has so thoughtfully provided you. I bought mine from a source that caters to employees of nonprofit organizations and public sector employees; your mileage may vary.