Personal Consumer Issues • M. Singletary: Think twice before buying a car-repair contract. [CarShield]

There was a news report about a couple in Florida who even did this for their house insurance when rates started going through the roof (sorry for the pun). They put their premiums in an investment account and it has grown higher than any expense they might have incurred even with a catastrophic hurricane. And they don't need to wait for the insurance adjuster to process the claim to get started on repairs. They can just hire someone immediately and pay them.

Since I do pay insurance in Florida I can understand the concern about rates there, but I'm skeptical about this based on rate history. They have built up enough savings just from premium payment redirection, such that they now have enough to replace their home? Depending on how long ago they began this, the early payments wouldn't have contributed much (if they began before rates "went through the roof") or wouldn't have grown enough yet (unless the premiums were invested in risk assets - and nobody would do that, I assume?) to pay for a home replacement.

And the claim that you can "just hire someone immediately" to do any work at all, regardless of financing, after a (impactful, obviously) hurricane in Florida seem questionable. At my other property outside of Florida I had an insurance payment in hand almost immediately but for example obtaining windows took almost a year. My experience from multiple homeowner claims is that what takes time with insurance is arguing over details, not receiving an initial payment that would usually represent maybe 80% of the eventual total - so more than enough funding to get work started, if you can find someone to do it and the supplies you need.

Statistics: Posted by Harmanic — Fri Aug 02, 2024 1:46 pm — Replies 9 — Views 532