The Bad News
It all started with an innocuous looking envelope in the mail from our homeowner’s insurance company. They were writing to let us know that when our policy would be renewed (in several months) the coverage would change as they would no longer be covering:
“any structure enclosed by screens on more than one side, constructed to be open to the weather, and not covered by the same or substantially the same materials as that of the primary dwelling.”
I had a hunch this wasn’t good news, so I called our insurance agent to confirm. The basics of it were this. Any structures on our property that aren’t under the roof of the house would no longer be covered under our policy. For our house, that meant our in-ground pool and the screened pool enclosure would no longer be covered.
If you’re not familiar with “screened pool enclosures” (also called pool cages or lanais), they are basically giant screened cages that go around the pool to keep bugs out (and for us, to keep Kitty PoP in). They are made of lightweight aluminum framing and their walls are basically just the equivalent of window screening. They are notorious for becoming projectiles in hurricanes, and (sadly) can be expensive to repair, not to mention they can do a decent amount of damage to the pool deck if the aluminum frame collapses inward.
The Worse News
It seems like everyone we know has a horror story about a friend whose pool cage sustained tens of thousands of dollars worth of damage in a big hurricane. So when we got the news about our insurance coverage change, I told our insurance agent to start looking for new quotes from other companies or see if it would be possible to get a separate policy to cover the pool and the screened enclosure.
Our agent searched and searched, and we even had agents representing other companies see what types of coverage they could offer. Here was the scenario we were facing.
- A separate policy for the pool and enclosure wasn’t an option. The value would be too small for a company like Lloyds of London to want to write it.
- Very few companies were even willing to write a new policy on our house due to its age (built in 1985), construction (wood frame), and distance to “open water” (about 0.75 miles). The best policy from a company that would include coverage of the pool and cage would cost $4,300/yr – with a slightly higher deductible than our current policy, to boot.
- Our current policy was actually getting a little more expensive, too, even with the drop in coverage. Coverage for everything except the pool and lanai with our current company would be $2,300.
But there was a catch on the policy that was willing to insure the pool and cage. Turns out the coverage on the pool and cage would drop whenever there was a tropical storm or hurricane warning or watch. Most of the year, it would be fully covered with a $1,000 deductible, but anytime our house was in the cone of uncertainty* of a tropical system, the deductible would rise to $3,500, and the coverage on the pool and cage would max out at $10K. (This is the kind of stuff where it pays to have an insurance agent you trust and who knows their stuff. How many people have these kind of loopholes in their policies and don’t even know it?)
So What’s the Bottom Line?
A $2K difference in yearly premiums, for what amounts to $10K worth of coverage in the times we’re most at risk. So, we figure the break even point here is:
$10K / $2K/yr = 5 yrs.
Do we think there will be catastrophic damage to the pool and its cage at least once every 5 years? Honestly, no we don’t. The pool and cage have been here for 15 years now, and there have been plenty of hurricanes and tropical storms that have come through the area without doing any significant damage to the structure. Now, we’re not fooling ourselves into thinking it’s invincible – we’re just simply noting that every tropical storm does not damage or destroy every pool cage in its path.
Game Plan If Something Happens
Even though the coverage we’re turning down would have only been worth $10K, it’s entirely plausible that a storm could between damage to the cage and pool, require $30K worth of repairs. What’s the plan then?
Until that point, we plan on putting $2K aside each year as part of our self-insurance fund. Even if it doesn’t cover all the damages, it’ll sure give us a nice head start.
Also, our coverage extends to the roof line of our house, so we could repair any damage up to that point immediately, and for a few hundred bucks more, remove the pool cage and close off the screened enclosure at the roof line as a temporary measure. Kitty PoP wouldn’t have quite as big an area to play in, and the pool would be open to mosquitos, but it’d be temporary. Then once we figure out how much the remaining repairs are, we would have to decide if we wanted to wait and save up the money to make them, or (if the HELOC is paid down completely at that point), put the repairs on that and pay it down after.
In the meantime, Mr. PoP is reinforcing some of the screened enclosure’s structure – replacing screws that have started to rust and stuff like that. We figure that we’re now going to be taking on 100% of the risk there, it doesn’t hurt to hedge our bets a little right now.
Have you ever decided to self insure part of your health or home? What was your game plan for the worst case scenario?