From Dow Jones & Company:



Home insurers operate a cyclical business which currently features rapidly rising rates and shrinking coverage due to concerns about new perils such as the link between climate change and severe weather events. Carriers have sustained heavy losses and some are pulling out of high-risk states, which limits coverage options. For homeowners who have substantial savings, self-insuring should be carefully considered in the event of a total loss.

Home insurance policies offer far more than coverage for property loss, including personal liability protection with coverage limits that can range from $300,000 to $500,000. Purchasing umbrella insurance for added liability protection is recommended for high-net-worth individuals, but it is required to own an underlying homeowners policy. Additionally, seemingly minor coverages in a typical home insurance policy can add up to significant value in the event of a total loss.

Average annual annual losses could reach $133 billion, and the effort to manage ever-expanding risks and potential future claims costs is growing by the year for everyone from individual homeowners to global insurance giants.



Read more: Fed up with paying up for home insurance? What about self-insuring?