Homeowners across the country face a growing challenge of skyrocketing home insurance costs as natural disasters become more frequent. Whether it’s hurricane season in the southeast or summer wildfires across the northwest many homeowners are questioning if they can afford the risk, or the rising premiums. While insurance remains essential for some, others are considering alternative approaches to managing these costs. Two prominent figures, Senator Rick Scott and author Suze Orman, offer two starkly different stances on this issue.
Rick Scott’s Homeowner Insurance Deduction Bill
In an effort to ease the financial burden on homeowners, Senator Rick Scott introduced the Homeowner Insurance Deduction Bill in August. This proposed legislation will allow taxpayers to deduct up to $10,000 of their homeowners insurance premiums from federal taxes. Scott’s motivation is clear: with insurance costs climbing due to natural disasters, he hopes this bill will help alleviate the strain on homeowners’ wallets and incentivize them to maintain adequate coverage. His approach is all about balancing affordability with responsibility, ensuring homeowners don’t go unprotected.
Suze Orman’s Bold Move to Drop Homeowners Insurance
On the other hand, Suze Orman has taken a more radical approach. She recently made headlines by announcing that she’s dropped her homeowners insurance altogether, citing the escalating costs as no longer worthwhile for her personal financial strategy. Orman, who has the financial flexibility to self-insure, decided the premiums were a poor investment given her ability to cover potential losses herself. However, she cautions that this path is not for everyone. For those without substantial financial reserves, maintaining some form of insurance is crucial.
Less Drastic Adjustments
There are other ways to reduce costs of insurance while still maintaining coverage. Many homeowners are opting for partial coverage, insuring only against specific risks like fire or hurricanes, instead of paying for comprehensive policies. Another option is increasing deductibles, which lowers premiums but means you’d be responsible for covering more of the costs in the event of a claim. These middle-ground strategies allow homeowners to stay protected while controlling the rising expense of insurance.
What Should Homeowners Consider?
These contrasting strategies highlight the wide range of options homeowners should consider when dealing with rising insurance costs. Whether you lean toward maintaining full coverage or exploring alternatives, it’s essential to take a hard look at your personal situation. Here are some key points to think about:
• Risk Exposure: Do you live in a high-risk area for hurricanes, wildfires, or other natural disasters? Cutting coverage could leave you vulnerable to significant losses.
• Financial Cushion: Can you afford to repair or rebuild your home out-of-pocket like Suze Orman? If not, you should purchase homeowners insurance and discuss with your advisor what the best policy is to meet your needs.
• Potential Tax Relief: If Rick Scott’s bill passes, it could offer you up to $10,000 in deductions—potentially making the cost of premiums more manageable.
Ultimately, deciding whether to adjust or even drop homeowners insurance depends on your financial situation, risk tolerance, and long-term goals. What works for one person may not work for another, which is why it’s so important to evaluate your options carefully.
For guidance tailored to your needs, reach out to our team at Crestwood. We are here to help you find the right solution for you and your family.
