Lots of smart people here, and I cant really find any local discussions on self-insuring. We're going through the process of selling our home and buying one of a lesser value. This fortunately puts us in a position of high equity.
Through this process I've been looking at our wider budget, and considering the value and costs of all of our insurances.
For example, we're paying for
Contents insurance about $60k covered.
Life & trauma insurance for my wife & I, about $50k each both benefits.
Car insurance for our car worth about $12k
and we're paying something like $100/month for these covers - and those premiums will most certainly increase in the future, a lot.
We also pay home insurance which is non-negotiable.
What I'm thinking about is, would I be better off to take a $50k offset loan as part of our new purchase, put that on interest only, and only ever use that money in the event of something that would be claimable. (and obviously put the $100/month back into the mortgage)
-I never have to worry about a claim being declined
-If I never 'claim', I get to keep all the money I would have paid in premiums.
-No excesses or loss of no claims discount - I could use that money for small events that I wouldn't bother claiming on a normal policy
-Those insurances could pay out repeatedly, I can only use saved money once.
-The additional lending could work against me in the future
I would keep third party insurance for the vehicle, as the exposure to risk is much higher than $50k.
Not looking for advice as such, just curious to know if anyone else here is doing anything similar, or thought about it.