Is Self-Insuring My Home a Smart Move?

Summary

Ramsey Everyday Millionaires: Detailed Summary of "Is Self-Insuring My Home a Smart Move?"

Release Date: July 11, 2025
Host/Author: Ramsey Network
Episode Title: Is Self-Insuring My Home a Smart Move?

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Introduction

In this episode of Ramsey Everyday Millionaires, the hosts from the Ramsey Network—including Dave Ramsey and George Kamel—delve into the intricacies of insurance versus self-insuring, particularly focusing on a real-life scenario presented by a listener named Martin. Martin, a 65-year-old rancher from Lubbock, Texas, seeks advice on whether to continue paying annual insurance premiums for his home and outbuildings or to self-insure.

Caller Profile: Martin's Situation

Martin reaches out to the show with concerns about his current insurance strategy. Here's a breakdown of his financial and insurance situation:

• Property Value:

  • Home: Valued at approximately $780,000
  • Two Barns: Valued at $150,000 each
  • Additional Outbuildings: Around $50,000
  • Total Property Value: Approximately $1 million

• Insurance Details:

  • Annual Premium: $9,600
  • Coverage: Comprehensive, including liability coverage
  • Claim History: No claims made to date

• Financial Assets:

  • Liquid Cash: $2.5 million
  • Investments: Substantial, but not easily liquidated

Martin's Dilemma:
Despite having substantial liquid assets, Martin is contemplating self-insuring his properties to save on the $9,600 annual insurance premium. He believes he can replace his buildings at a cost lower than the current insurance valuation.

Hosts' Analysis: Financial Position and Self-Insuring

Evaluating Self-Insuring Viability

George Kamel begins by scrutinizing Martin's financial readiness to self-insure:

"My guess is you're thinking about it because you've got, you think the right amount of cash, right amount of money to be able to do this or is this just an idea only?" [00:52]

Martin confirms that he believes he has sufficient liquid cash ($2.5 million) to cover potential replacement costs without relying on his investment portfolio.

Opportunity Cost of Self-Insuring

Dave Ramsey addresses the fundamental question of opportunity cost:

"You put that 2 million in a savings account, it's going to make enough to pay for your insurance 10 times over." [02:00]

Ramsey emphasizes that by maintaining the insurance, Martin preserves his cash, allowing it to continue growing and potentially increasing his overall wealth. Moreover, insurance provides peace of mind, mitigating the risk of substantial financial loss due to unforeseen events like tornadoes or hailstorms.

Risk Management and Peace of Mind

George reinforces the importance of risk management:

"If I were you, Martin, here's the bottom line. If I were you, I would pay that insurance with a smile on my face." [03:23]

He highlights that the peace of mind afforded by insurance often outweighs the discomfort of the annual premium payment. Additionally, maintaining insurance protects Martin from potential liabilities and lawsuits, further safeguarding his financial standing.

Emotional Barriers to Insurance

Psychological Resistance

The conversation takes a personal turn as George identifies Martin's emotional resistance to paying insurance premiums:

"The idea of paying insurance is not even about the insurance. You just got stuck at pain." [05:09]

Martin admits that the act of making regular insurance payments aggravates him, leading to dissatisfaction despite understanding the logical benefits.

Overcoming Mental Blocks

To address this, the hosts suggest reframing the perception of insurance payments:

"It's living rent free in your head." [04:03]

George advises Martin to shift his mindset, viewing insurance not as a loss but as a strategic investment in his financial security and peace of mind. By altering his mental approach, Martin can reconcile the necessity of insurance with his desire to optimize his finances.

Recommendations and Final Thoughts

Optimizing Insurance Costs

Dave Ramsey proposes practical steps to potentially reduce insurance expenses:

"One thing you can do is see if you can, you know, raise your deductible, which could lower your premium." [04:24]

By adjusting deductibles, Martin can lower his annual premiums while still maintaining adequate coverage, balancing cost savings with financial protection.

Maintaining Financial Stability

George summarizes the key takeaway:

"The insurance is a really smart financial move for you. Very smart. That's peace of mind." [03:37]

He underscores that, given Martin's financial position, continuing with insurance is a prudent decision that ensures long-term stability and mitigates significant risks associated with self-insuring.

Notable Quotes with Timestamps

• "You put that 2 million in a savings account, it's going to make enough to pay for your insurance 10 times over." — Dave Ramsey [02:00]

• "If I were you, Martin, here's the bottom line. If I were you, I would pay that insurance with a smile on my face." — George Kamel [03:23]

• "The idea of paying insurance is not even about the insurance. You just got stuck at pain." — George Kamel [05:09]

• "One thing you can do is see if you can, you know, raise your deductible, which could lower your premium." — Dave Ramsey [04:24]

Conclusion

In "Is Self-Insuring My Home a Smart Move?", Ramsey Everyday Millionaires offers a comprehensive analysis of the pros and cons of self-insuring versus maintaining traditional insurance coverage. Through Martin's case, listeners gain valuable insights into evaluating their financial positions, understanding opportunity costs, and addressing emotional barriers to financial decisions. The hosts advocate for the security and peace of mind that insurance provides, emphasizing its role in effective risk management and long-term wealth preservation.

For individuals contemplating similar decisions, this episode serves as a practical guide to assessing financial readiness, optimizing insurance costs, and balancing emotional comfort with strategic financial planning.

Transcript

[Martin]

Foreign.

[Dave Ramsey]

This episode is brought to you by SmartVestor. Connect with an investing pro near you at RamseySolutions.com SmartVestor all right, let's go.

[George]

To Martin in Lubbock, Texas. Martin, how can we help today?

[Martin]

Hey man, I appreciate answering my call. I enjoy listening to you guys.

[George]

Thank you.

[Martin]

I'm calling, I'm calling about insurance. I'm a 65 year old rancher that is puts insurance about a step above the irs and I'm to the point of trying to decide if I want to self insure not my vehicles so much but our home and our in our outbuildings on our ranch and just kind of want your idea about it. I've been thinking about this for quite a while.

[George]

Well, my guess is is you're thinking about it because you've got, you think the right amount of cash, right amount of money to be able to do this or is this just an idea only?

[Martin]

Well, I can, I can replace it myself.

[George]

Yeah, run the numbers. Yeah, run the numbers out for us.

[Martin]

Well, the, the house I'm going to say is probably what they have it valued at 780,000. And then the. I've got two barns that about 150,000 apiece. I can build them cheaper than that, but that's what it would cost if I had them built because I built them years ago or we did a couple other buildings run probably about $50,000. So whatever that comes out to a million or so dollars maybe let's say a tornado came through which has. It has happened before. But I have not made a claim on my home ever. Not a hail climb.

[Dave Ramsey]

What is your insurance cost total?

[Martin]

Very much. It's per year. It's. Oh, I'm grasping, about 9,600 a year.

[Dave Ramsey]

Okay.

[George]

Versus if let's just play out the worst case scenario and you just ran the numbers. So if I'm understanding you right, you're telling me you got that cash set aside where you could replace all those buildings, home included.

[Martin]

Mm.

[George]

But why. So here's my. And this is an honest question, why does the $9,600 bother you so much? Yeah. Because instead of using up all that.

[Dave Ramsey]

Cash, how much cash do you have? Like what. How much do you have liquid?

[George]

That's fair.

[Martin]

Liquid cash in.

[George]

It's not a trick question.

[Martin]

No, I'm going to say let's say 2.5.

[Dave Ramsey]

Okay.

[Martin]

And then of course I've got investments that I can't just. That's liquid. That I can't just get out.

[Dave Ramsey]

It would take some Work to liquefy it, if you will.

[George]

I just don't see what would possibly bother you so much given that that's your financial position. Why ninety six hundred dollars a year?

[Martin]

Yeah.

[Dave Ramsey]

You put that 2 million in a savings account, it's going to make enough to pay for your insurance 10 times over. And so I'll tell you, Dave Ramsey has insurance on all his properties. He can very well sell from, sure, if he wants to. But for the bargain, it's worth the peace of mind knowing he doesn't have to burn his own cash for the, you know, 800 bucks a month that you're paying toward insurance. And the other pieces for liability coverage, you know, exposure to lawsuits.

[Martin]

No, I've been told that a bunch.

[George]

If I were you, Martin, here's the bottom line. If I were you, I would pay that insurance with a smile on my face. Given your position, you.

[Dave Ramsey]

You're worth several million dollars, and you got to pay the tax man.

[George]

That's the smartest.

[Dave Ramsey]

On top of paying taxes already.

[George]

Yeah. Put all your angst towards the irs, that I'm all for. But not the insurance man. In this case, the insurance is a really smart financial move for you. Very smart. That's peace of mind. I would go to bed every night going taxes, but then I'd go insurance. That's. That's. Am I right, George?

[Dave Ramsey]

Well, it sounds like you've been burning some brain calories just thinking about this. It's living rent free in your head.

[George]

Just thinking about that insurance man is just barely above the IRS guy. And I thought there was a deeper story here.

[Martin]

It wasn't. It wasn't. It's just that, you know, when. When you do cars and you do tractors and you do, you know, you do crop insurance and you. I get it. It seems like that's all I do is insure.

[George]

I get it.

[Dave Ramsey]

And one thing you can do is see if you can, you know, raise your deductible, which could lower your premium, so you can still dig into your insurance and say, hey, where can I do better to lower what I'm paying, since I can take on more risk? So I would work with a good insurance broker. Do you have one that you trust?

[Martin]

Yeah, I do. I do. I've. I've known him for years, and so I can't really. I don't know if I put him with the irs, but there we go.

[Dave Ramsey]

But I would talk to him.

[George]

You know what this really is, Martin? I think I.

[Martin]

Make me feel good. Okay. Yeah.

[George]

Well, you know, Martin, I think I Think I figured out what's going on with you. You just. You're so tight, you squeak when you walk.

[Martin]

And you. You pretty well.

[Dave Ramsey]

The idea of you paying anyone for anything, so.

[George]

The idea of paying insurance is not even about the insurance. You just got stuck at pain.

[Martin]

And it is. It is.

[George]

And so the force, the forced payment, is what gives you hives.

[Martin]

Yeah, yeah. It. It's what just aggravates me.

[George]

I get it, brother.

[Martin]

But, man, check back. I'm like, yeah, I know.

[George]

But the flip side of that is, is that it allows you to keep that cash and that 2.5 million can grow.

[Martin]

And.

[George]

And so you're just gonna have to play some type of mental game here to get over it. And I thought that was what was going on with you. And I get it. I get it.

[Dave Ramsey]

I'd shed a tear and then wipe it with a hundred dollar bill and move on with my day.

[George]

Oh, no, that's a flex.

[Dave Ramsey]

That's how you do it.

[George]

I like that.

[Dave Ramsey]

I want to be Martin when I grow up, though. I mean, this.

[George]

Who doesn't want this? Guy's got it.

[Dave Ramsey]

I want to be a race.

[George]

He's got dirt. He's got buildings on the dirt. He's got millions in the bank, and he's calling us, griping about insurance. Come on, Martin.

[Dave Ramsey]

That's how a true American is.

[George]

Life is good, friend.

[Dave Ramsey]

He would have been quarantined to the harbor if he was a little older.

[George]

Guarantee you he'd have been throwing it over the ship.