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From: John De Armond
Newsgroups: misc.rural
Subject: Re: Rural Property Insurance
Date: Mon, 23 Jan 2006 19:19:47 -0500
Message-ID: <>

On Mon, 23 Jan 2006 18:16:51 -0500 (EST), Anonymous
<> wrote:

>Driveway over ½ mile long? House not visible from other houses? Own and
>burn wood in a woodstove?

That wood stove is a killer.  I've been told that by several agents,
that having a wood stove either makes one uninsurable or very high
priced.  I was going to put a wood stove in my restaurant as another
source of heat.  All the agents told me that would make the place
uninsurable as commercial property.  I asked about residential
properties and they said that the stove was considered one of the
highest risks there is other than weather.

A buddy of mine and I recently installed him an outside, stand-alone
wood-fired water boiler for his heat, replacing a wood stove.  One
reason was to get the ashes and smoke out of the house but the other
was to remove the increasing problem of finding insurance.

>Several miles to a fire station? Even if there is a fire hydrant at the
>end of your driveway and you live right on a fairly good sized private
>lake, they consider the water supply to be inadequate. To me this is
>typical rural lifestyle.

But ISO doesn't look at that.  They rate the water supply by the size
of the hydrant and the GPM free flow capability.  Do you have a
standpipe on your lake?  That might make a difference.

>No house has burned down around here for 10 years. We are careful with
>our woodstoves. Have they decided we should pay for Katrina instead of
>those living on the Coast? It's hard even to get quotes for new insurance
>if you are Class 9 and my neighbors have found they often give you
>insurance as a "sort-of-bait-and-switch" doubling your rates the second
>year and threatening to cancel. If you have a mortgage, you have to have

Well, we're all going to pay some for Katrina, just as they pay for
our losses.  That's the way insurance works.

>Is there any insurance company that is servicing rural areas well at
>decent rates? The Farm Bureau does quote, but they are very expensive
>compared to the rates we used to pay.

I've never found Farm Bureau to be anywhere near competitive around
here.  Are you or any of your parents a veteran?  If so, USAA is the
only way to go.  Pretty much no questions asked on anything I've tried
to insure.  That includes my mountain vacation home, a motorhome, my
house, my electric vehicle (watch other companies scream at that one)
and my regular cars.  The only thing I had problem with was renter's
insurance.  I live in an apartment in my restaurant building when I'm
in town.  That makes it "commercial property" which they would not
insure.  I was told by the agent that if I got a separate address for
the apartment, then they could do it.  Too much trouble.

Anyway, if USAA isn't an option, try Grange.  They service the
"subprime" market.  They were the cheapest I could get for my
restaurant.  My 70 year old building doesn't meet current code (duh)
so none of the regular insurers would touch it without thousands of
mods.  Grange is about $500/year more expensive that the "mainstream"
companies but in my case, worth it.

You might also check with Nationwide.   They were by far the cheapest
on my commercial truck, considered high risk.

One other thing you might want to look at is a residential fire
sprinkler system.  Most insurance companies give significant discounts
for the presence of a sprinkler.  USAA's discount will be over
$100/yr.  I'm about to install one in my mountain home, as the nearest
fire department is 30+ miles of mountain road away and the river, the
only source of water besides our wells is a half mile away.

I should add that as with everything insurance, this is HIGHLY
variable by state.  I understand that TN is one of the more
consumer-unfriendly state (the best laws money can buy) regarding


From: John De Armond
Newsgroups: misc.rural
Subject: Re: Rural Property Insurance
Date: Mon, 23 Jan 2006 21:46:54 -0500
Message-ID: <>

On Tue, 24 Jan 2006 02:03:41 GMT, "Ann" <> wrote:

>On Mon, 23 Jan 2006 18:16:51 -0500, Anonymous wrote:
>> Several of my neighbors have had their property insurance cancelled
>> lately; others have mentioned large premium price increases (up to 60%).
>I have homeowner insurance with one of the larger home/auto insurers and
>they sent inspectors to all their insured properties two years ago.  The
>primary reason given was that spot checks had found that the replacment
>cost on most properties was too low.  Imo, they were also checking to see
>if their agents had written policies on questionable properties.  I think
>they found something to be done most places.  Even though I thought it was
>Mickey Mouse, I didn't argue about my assigned repair and did it promptly.
>The premium is now about 35% more than before the inspections, but I'm not
>complaining because the standard homeowner policy is the best deal.
>(Another advantage of insuring with them is that they don't have a problem
>with wood stoves.)

Wow!  Never heard of 'em doing that here.  Guess that's a state thing.

You reminded me of another anal probe the insurance companies do.  If
you have replacement value insurance on your property but (in the
company's opinion after the fact) you don't have it insured for what
they consider the fair market value, they'll apply an "underinsured
pro-ration" to the settlement.  They don't bother to tell you about
that when you buy the policy.

I almost got bit here.  This is a very old building and I paid an
appropriate price for it.  I could not in any way afford full
replacement value on the number of square feet I have.  I bought
enough insurance to pay the mortgage, pay to remove the debris after
the fire and enough money in my pocket to go forth to something else.
My agent suggested a replacement value policy which I bought.

Fast forward about 8 years.  I was chatting with a friend who sells
insurance in another area and happened to mention my situation.  He
blanched and turned white.  After he settled down, he explained how
I'd get screwed if I had a loss.  Full replacement value is probably
5X what I had it insured for so if I'd had a full loss, they'd have
only paid me 1/5th of the face value of the policy.  Bastards!!!  Of
course, in the meantime, they'd collected full premiums.

I quickly found another agent who knew what I was talking about and he
fixed me up with regular stated value insurance.  Much cheaper too.
Just for good measure I had an insurance-oriented lawyer review what
I'd done and review the policy.

just a word to the wise.

From: John De Armond
Newsgroups: misc.rural
Subject: Re: Rural Property Insurance
Date: Wed, 25 Jan 2006 17:15:36 -0500
Message-ID: <>

On Tue, 24 Jan 2006 21:10:26 -0500, "John Gilmer"
<> wrote:

There's so much *ucked up thinking here that I almost don't know where
to start.

>> I own enough real estate that if I woke up tomorrow and
>> found this building in ashes, "moving" would involve little more than
>> a change-of-address notice to the post office.
>Good for you.   But after the fire you have one less house.

Big deal.  If it doesn't burn, as statistically it won't, then I've
saved oh, maybe a kilobuck a year.  It's called risk.  I've wagered
the value of a small house in a poker game before so wagering that a
building won't burn is no big deal.  I don't keep improved property
long so the risk is acceptable.

The only maxim that you only insure what you can't afford to lose
applies here.  I can afford to lose a house so I'm not wasting money
on insurance.  My personal and business possessions, now that's
another matter.

>Tell me, do you keep a bunch of vacant properties around?   What are you
>losing in "opportunity cost" by keeping a spare house around?   I bet it's
>more than the cost of good insurance coverage.

I always get a kick out of someone who reads a buzzword in a magazine
and then tries to use it to sound intelligent.  Such with opportunity

The term has little meaning outside the business setting.  As someone
who knows how to separate his business and private affairs, I know
that other things are worth more than squeezing the last dollar out of
everything.  There is value in security, convenience, peace of mine
and so on.  Yes, I have a few vacant properties, as does most anyone
of substance.  They enable me to live/vacation in different parts of
the country whenever I want to.  They serve as backups in case
something happens to my nominal residence.  They appreciate just
sitting there, as I'm careful about what and where I buy.  That's all
the return on investment I need.

In fact, I have a wide variety of real estate in my portfolio, a
variety that I'm exactly pleased with.  If I was not pleased, I'd
change it.

I suppose you've heard about the guy who dies the week he retires.  A
BUNCH of folks die within a few years of retiring.  I'm just the
opposite.  If I live to the typical old age, I'll have been retired or
semi-retired (hard to tell which is which when you do what you love,
when you want to and make money doing it) longer than I worked. That's
very nice.  I'm not rich but I'm comfortable and have sufficient money
to do what I want to do.  That's also very nice.

I sure am proud that there are all you working stiffs out there with
your 80 hour weeks and your 60 year working lives.  That lets me take
it easy and live off that generated wealth (what investing does).

>> I choose not to be insurance-poor and to assume some risk myself.
>> Revolutionary idea, yes?
>Not at all.
>BUT if you "do the math" it makes more sense to "go naked" with a modern
>home with replacement cost about equal to current market value than with a
>some that has little market value.   In either case the fire means you have
>to find a new place to live.   In the one case, your loss is chicken feed
>and the other case it's serious money.    But the serious money loss can be
>taken as a deduction.

Oh bullsh*t.  I don't want anything to do with a "modern" sh*t-built
crackerbox, the value of which is inflated by other morons who are
willing to be mortgage paupers to live in the "right places."

I'd rather buy a 30 or 40 year old property with just enough
inexpensive cosmetic problems to drive the price down.  Buy it with
cash, fix it up as necessary and sell it when the market is right.  I
can sometimes double my money and frequently make half that much in a
couple of years that way.  Or if I decide to live in the place for
awhile, the property's paid for and costs me nothing more than
property tax while appreciating nicely.  I can make more money by
properly buying real estate and just letting it sit for awhile than I
can intensely working the market.  I've tried it both ways and like
the no-work method a lot better.

If one of those "half price" buildings happens to burn, well then I
just lost a little.  About the same as making a bad purchase.  Or
maybe I won't.  I've owned more than one piece of property where the
land was worth more with the building removed than before.  In fact, I
own one right now like that.  I'm just about to take a dozer to the

I've been operating this way for almost 30 years.  I've had one house
fire that was insured and a smaller one that wasn't.  Frankly after
the hassles of fighting with the insurance company and contractors and
the city officials and everyone else trying to nick me, I'd rather
just walk away from the fire and write it off as bad luck.  That's
what I did with the second fire and I'm glad I did.

So many people seem to forget that they can't take it with them and so
spend all their lives making more and more money and then die before
being able to enjoy it.

I have a different philosophy.  For the end of life, I want enough
worth that I can be properly cared for when I can no longer do it
myself.  Beyond that, I want enough money to live the way I want to.
And I want to make that money in the most labor-adverse methods
possible.  Things that will continue to make me money when I can't or
don't want to work.  If you have a mind for the market, then that can
work.  I don't and I find real estate to be my way.

I also realize another truth, that it doesn't matter how much money
you make, it matters how much you keep.  A major portion of the method
of keeping more is avoiding taxes and overhead.  If I make $100k a
year only to have half of that eaten up by income, property tax,
insurance and mortgage payments, I'm not doing so hot.  OTOH, if I
make $50k and make it in such a way that most of that is shielded from
tax then I have as much disposable as the $100k guy but a LOT more
time in which to enjoy it.  That's a secret that not many people

Perhaps if you didn't argue so much, you could learn something new.


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