Homeowners insurance once the house is paid off

Call up your agent and let them know. They should be able to give you your options.

Tips?

Like what billing options are there?
Or are you asking about changes to your coverages because there is no lien?

I pay State Farm twice a year

Yea. Kinda interested in coverage options. I can pay monthly, yearly or anytime in between.

Going cheap on home insurance coverages does not sound smart to me.

But if you treat insurance as a protection for catastrophic losses that you can't afford to undertake, you will probably come out OK.

Regarding dwelling coverage, don't skimp on the insurance to replacement value. Many states allow a co-insurance clause (you insure the home 80% of reconstruction, then your claim pays 80% of damages minus your deductible)

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Many states allow a co-insurance clause (you insure the home 80% of reconstruction, then your claim pays 80% of damages minus your deductible)

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If your home has a 80% co-insurance clause you will be paid 100% of damages less deductible if your home is insured at 80% or higher of replacement cost.

If you insure your house for less than 80% of replacement cost. The co-insurance clause comes into play and claims will be paid pro-rated.

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Yea. Kinda interested in coverage options.

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If you had a good replacement cost policy before, nothing should change on the coverages just because your mortgage got paid off. Coverage should've always been based on the cost to rebuild your house, not how much you owed on the mortgage.

Most insurers require you to insured to full replacement value anyway. Some will allow you to go a little below 100% replacement value...as low as 80% in some cases. But you need to be at least insured to 80% or better at the time of the claim to get paid replacement cost and without a co-insurance penalty.

Not sure what you're asking. If you're asking for payment options, you should still have the option to pay monthly or annually - maybe semi-annually also. You mention the home's age and the fact that it has a new roof so that sorta makes me think you're considering coverage changes -- if so, don't. The fact that you have a paid off home doesn't change your coverage needs. Still insure it for 100% of the replacement cost value because if you drop it to the minimum of 80% and have a claim, you'll be the first one posting here about how you got "screwed" by the insurance company. Trust me, you don't want to drop below 100% replacement cost value.

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If your home has a 80% co-insurance clause you will be paid 100% of damages less deductible up to 80% (or whatever percentage you're insured at) of the replacement cost if your home is insured at 80% or higher of replacement cost.

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FIFY

You'd be paid 100% of the damages, less the deductible, up to whatever percentage of your home's replacement cost is that you're insured for. You'd still run the risk of being underinsured - especially in this era of extremely high costs of materials - if you're insured for at least 80% but less than 100% of the replacement cost value. It's best to be insured for 100% RCV in 2022 because if you have a total loss, you could still find yourself coming out of pocket for more than just your deductible.

The 80% rule just means you would still be paid for the recoverable depreciation in the end but only up to the total amount you were insured for. Insuring for 100% RCV ensures you'd only have to pay your deductible and that's it.


I could be wrong here, it's been a while since I was in the P&C industry. Maybe someone could correct me if I am.