Insurance woes

Dan and I don’t quite see eye-to-eye when it comes to insurance, and this has been a tense topic in our house this week as we coordinate all the needed insurances for buying a house.  Dan firmly believes that insurance is a scam, and I’m inclined to agree with him, but I know that it’s unfortunately necessary if you want to drive or own a house.

As soon as we knew we were buying something, we were in contact with our insurance brokers to get quotes for home insurance.  In a previous post, I skimmed through the details of the home insurance quote we decided on from my broker (see the post here), but let’s take things back a few steps and revisit how we got to that point.

From the day we moved in together 3 years ago, I had tenants insurance in place for our stuff.  This one was all me, readers.  Dan went along with this happily enough, since the cost is relatively low, but I don’t think he was super excited about it.  At the time, I was the only one with insurance of any kind (for my car, Dan drove a car but it was entirely under his mom’s name and insurance so he didn’t have his own insurance <- this comes up later), so we added a tenants policy to my car insurance, and I enjoyed a sweet sweet multi-policy discount.  Tenants insurance cost us around $30 a month (there were some changes in the price over 3 years, but it always hovered around $30), and includes $2 million in liability coverage, and an approximate replacement value of $30,000 for our stuff.  Considering almost everything we own was purchased from Ikea or given to us for free, that sounded just fine.

For buying a home, we need home insurance, in particular, a policy that includes “fire insurance coverage for full replacement value on the property effective the closing date with loss payable to your mortgage company”.  When I sat on the phone with my broker, the first calculation we did was the replacement value of the house, which came out to $216,000 (with some tinkering on her end).  That’s all fine and dandy for the bank, since you just read the line that tells you lender gets the money.  The other half of that is the part that we, the homeowners, care about, which covers things that happen to our house that we will want insurance to fix (at great cost to us, since now we’ve made a claim and our premiums get jacked to the high heavens, ugh).  I kept the coverage in line with what I have for my personal car insurance, which includes $2 million liability (for your own knowledge, readers, $1 million liability really doesn’t cut it) and $1,000 deductible.  The quote came out to $63.09 per month, which was right around what I was expecting to pay.

Now here comes the tricky part.  Remember how I mentioned Dan didn’t have his own insurance?  When he leased a new car in February this year, he had to arrange for his own insurance.  He had contacted my insurance broker to see if we could bundle all of our policies (my car, his car, and tenants insurance) together and save some moola, but this is where the snag came up.  Dan had been driving his mom’s car, covered by his mom’s insurance, more or less full-time for the last 4 years.  He’s been driving his mom’s car for the last 6-7 years, all the while, the insurance has been under her name.  Dan was under the impression that he was named as either an occasional driver, or a primary driver.  He was not named as either.  When we tried to get a quote from my insurance provider, he was a 27 year old male driver with a 7 year gap in his insurance history.  That’s a red flag in the insurance world, and the quote he was given reflected that.  He decided not to go with my insurance company based on the outrageous price we was quoted, and he went somewhere else.  We currently both have our own insurance, through separate companies, for our cars.

In shopping around for house insurance, Dan and I were both contacting our car insurance companies to get quotes and find the best deal.  I laid this out on the line for my broker, and told her flat out that we were going with whichever company gave us the best price for what we were looking for.  It took a few days of waiting and some long phone conversations, but we got it down to a chart for comparison:

Victoria’s Insurance Company

Dan’s Insurance Company

Victoria Car

$108/month*

*includes multi-car discount

$138.92/month

Dan Car

$143.42/month

$161.94/month*

*includes multi-car discount

Home Ins.

$63.09/month

$70.20/month

It was kind of a no-brainer, so I happily contacted my insurance broker to let her know she won the battle.  We were going to transfer Dan over to my insurance company too, but his insurance with his current provider expires in August, so we thought we’d wait until this comes up and avoid any potential cancellation fees or awkward phone calls.

The bigger insurance headache came with the life insurance.  Buying a house REQUIRES home insurance, because the bank most certainly wants its money if your house burns to the ground.  It does not require life insurance, but it’s a good idea.  Our mortgage broker asked us if we have it, and if you don’t, you have to sign some kind of waiver to even have them complete the mortgage paperwork.

If I die before the mortgage is paid off, Dan would be left to carry the cost of everything on his own.  He says he can do it, but if he wasn’t able to, he would just sell the house.  I can not carry the cost of our new house by myself, and I don’t like the idea of having to move.  I opted to get life insurance that covers the value of the house, and it costs a whopping $35 a month.  I already have an existing life insurance policy for myself, which my mom started for me about 10 years ago because she was concerned that I wouldn’t be able to get life insurance because of my baby lungs (life-long asthma, represent).  My policy is a permanent life insurance policy, where I essentially pay into my own death benefit over the course of the policy.  It’s great and all, but it doesn’t come anywhere near the value of our new house, since it’s only meant to cover things like funeral costs (FYI, family, please cremate me in a cardboard box after you donate all my organs, and don’t waste any money on mahogany caskets or open bars).  With that policy already in place, I was looking to take out a second policy just for the house, related to when one of us kicks the bucket.  The policy I got is over a 20 year term, and is based on a $250,000 value, which for whatever reason, worked out to less each month than the actual amount of our mortgage, which is $209,000.  Dan was not a happy camper, and he’s still not a happy camper, but it’s happening, and I don’t think it’s a bad decision.  I opted not to get decreasing term life/mortgage insurance, mostly because the nice man talked me out of it and I’m kind of a sucker.

The next step for the insurance is some sort of medical exam, where a nurse will find Dan and I and test our vitals and sign off that we won’t die in the next 25 years.  All the paperwork should be finished and done by the time our closing date arrives, and that’s really all that matters to me.

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About joeyandjanice

Two crazy kids trying to make sense of the jumble surrounding making the jump from renting to owning our first home. Join us here as we stumble towards the biggest purchase of our lives.
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