My 89-year-old mom’s home is in serious disrepair, and she’s severely ill. Can we skip buying her home insurance?

This year — instead of reminding us that insurance payment due — we got a notice that we missed a payment and our policy was getting cancelled. We’d had the same small agency for several years that always took care of us, but evidently our policy was sold and this new firm didn’t remind us. Yes, that’s on us. Anyway, the insurance adjuster came out and identified several areas in need of repair.

The house is large and very old — one section dates back about 150 years, and the “new” section is about 75 years old. We’ve been patching the roof to stop leaks, keeping up with basic maintenance only. Our goal is to keep the house secure, so our mom can live in it as long as possible. The adjuster’s estimate for repairs required to get insurance was fairly significant — to the tune of several thousand dollars.

The policy is almost $4,000. If we are lucky, our mom will be with us another year. We’ve told the insurer we want exclusion on the roof — we won’t get a new roof at this stage — and we primarily want liability coverage. If there’s a fire or something else major, we’ll just scrap the house and sell the land

No one will want the house — it’s too old and too many repairs are needed. But the land, 12 acres total, is worth quite a bit. My brother-in-law who is sharp and a truly great guy — so trust him — said just not to get insurance. He figures the risk is low, so we could save that money.

So, do we get home insurance anyway? It’s always a matter of money. Our mom does have some, and my sisters and I would help if needed. It’s not a financial issue. Rather, what’s the smartest way to allocate her funds?

Sincerely,

Uninsured and overwhelmed

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Dear Uninsured,

Insurance can really feel like a racket sometimes. After all, we’re paying for something that we will hopefully never use.

I can certainly empathize with your dilemma. Recently, I moved to a new apartment within my co-op, and there was a brief window where I was still in both units before I could turn my keys over for the old unit to be sold. My co-op requires all residents to have condo insurance, but had it not I still would have paid for both policies. After all, what if a flood happened in my old apartment while I wasn’t there? I’d want the financial protection that only insurance can provide.

Yes, you need homeowner’s insurance. It may not be required by law — and there might not be a lender telling you that you must buy it — but it would be a mistake to skip it. And in your letter, you already hit the nail on the head as to why.

“If the house is truly in disrepair, having liability coverage if someone is injured on the property will be important,” said Philip Rutterer, a financial planner based in Nashville, Tenn. “This is the biggest reason to still maintain a policy.”

Presumably, your sister has doctors or nurses who come by to check on your mother and assess her condition. At the very least, I imagine that friends and family stop by to spend quality time with her. So picture, for a second, what might happen if a friend were to trip on a loose floorboard, and break a bone. In situations like that, it’s normal to rely on a home insurance policy to cover some of the costs of their care and rehabilitation. Without insurance, you could be on the hook for that.

Never mind the fact that your mom and sister both need a place to live. An insurance policy would cover the cost of her housing if disaster strikes. Without insurance, how would you all pay for that? And where would they go? These are just a couple of the possible fiascos you could face without insurance.

Even when it comes time to sell the home, you could find that it’s harder to find a buyer if you don’t have insurance on the property. You’ve assumed that no one would want to bother fixing up the home — but anyone who has flipped the channel over to HGTV knows that flipping homes is still very much in vogue. It may not be your taste, but it very well may be someone else’s. And plenty of first-time home buyers are opting to purchase fixer-uppers in today’s tight real estate market, given the lack of turnkey homes for sale.

But a buyer might think twice about purchasing the home knowing it’s not insured. What if your mom left the stove unattended, causing a fire that burned the home to the ground? They might rightfully balk at going through with the purchase if they have to rebuild from scratch if their plan was simply to do a remodel of the existing structure.

If you haven’t done so already, ask around to other insurers to compare estimates. Perhaps another company’s adjuster would be more lenient. At the very least, you should comparison shop the cost of the policy.

“Different carriers might be more aggressive on pricing if they are trying to grow their market share in the area,” Rutterer suggested. Also, ask the insurer if they will pro-rate the plan if your mom does pass away within the next year and you sell the home.

Ultimately, if you need to do repairs to secure coverage, negotiate to find the most cost-effective method. And if you’re frustrated about having to spend that money, it might help to think of it as a down payment on your eventual inheritance. Knowing how popular the Atlanta housing market is, I’m sure when it comes time to sell the home and its land, your family will be pleased with the outcome.

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