Note also that in some cases you might be the optimal person to hold the risk that your house burns down, if, for example, your liquid net worth is 100x the replacement cost of your home. And that's illustrative of the value of markets: you can choose to transact in them, depending on your personal circumstances. The insurance market exists because for the vast majority of people, rebuilding their home is not feasible with their current net worth. But for a small number of people it might be, and for a small number of firms it's probably worth it to insure many thousands of people, and then you can even slice up the shares of those insurance firms and sell them on the stock market so that the risk of your house burning down gets socialized across all the other shareholders but at the same time you have a stake in the profits.
Rebuilding a shitty house is quite possible for a person. Like people can literally build simple shelters in a time frame of hours. It's only because of so many regulations and rules that you have to go into multi-decade debt.
For instance, apparently the EU is currently considering a regulation that houses must be energy efficient. Getting a current house into compliance would cost on average $50k. That kinda stuff adds up.
Please point me to this law. Unless you are in a mortgage, no law requires you to hold homeowner’s insurance, and you can absolutely self-insure, to my knowledge.
The same is not true for auto insurance in most states, though most also have an option to self-insure by putting up collateral.
There may not be a law explicitly stating you have to have homeowner's insurance. But.
Without such insurance, specifically the "injury liability type" with its limits; then if someone gets injured on your property there may be no limit to your liability.
So even people who could afford the loss buy insurance because it is the best method of limiting intangible risks.
My understanding is that for an LLC to provide protection the house would have to be used for purely business purposes and that there can be no co-mingling of personal finances. the concept is called "piercing the corporate veil". IANAL but I looked into this pretty extensively when choosing how to protect myself with investment properties.
