Insurance Outrage

[ziggy29]

Quote:

Originally Posted by Pete I think we could save a few bucks if they didn't advertise so much.

If they stopped advertising, they'd have fewer customers and lose some economies of scale that give competitive cost advantages. As I've said before when people link advertising costs to higher prices, if they make more in profits from customers attracted by the advertising than they spend in the advertising itself, the advertising can improve profits and/or lower our costs (in a really competitive industry, which may or may not include insurance, businesses would feel the need to pass some of the cost advantages to the customer).

[SVHoper]

Small comment about the flood insurance. We had a house in a flood zone, neighbor said to contact this guy - surveyor type person and maybe you can get flood insurance lowered.

I was amazed - paid a $2-400 fee - he wrote a report saying we were x feet above sea level (and never been flooded) so our flood insurance dropped from ~$1200 to <$300 for ever.

I love that neighbor.

[Mulligan]

Quote:

Originally Posted by unallowable I have a situation where I am paying out the nose for insurance coverage and wondered if anyone had a suggestion. I am working and can afford it now but in 15 months I will retire - and will be a big hit each month. 2 days ago I closed the purchase of a small stilt house on a river near where I live. It is in a flood zone, the structure is wood and nothing fancy, the primary value is the 1.75 acres with over 300ft of waterfront. I have all my coverage with Farm Bureau Ins. Recently rolled auto ins. into existing coverage on primary residence, 2 rentals (plan to sell one when I retire) and umbrella policy. Thought there would be an advantage (discount?) in giving them all my business. The coverage amount (not the flood insurance part) on the river place is more than twice the appraised amount. And just yesterday I received notice they were increasing the coverage amount on my primary residence by $60K with corresponding increases on contents, etc. This too is more than the appraised value of the entire property (this appraisal includes 3 acres that would never be a replacement cost). Can they just arbitrarily do this? I also am paying max. coverage on my autos (one 1999, one 2009) even tho I have clean driving record. Was told they had to do that for me to have the umbrella policy. Any of you with umbrella policy told this? I plan to address all this with them but thought would run it by this forum first. Thanks,

Concerning overinsuring replacement value of home, my insurer kept sneaking it up each year. I finally had enough, and complained. They first said it was computer models and had to follow it. I took the answer like a sheep, then stewed about it for a day. Called them back the next day and said I was dropping them because there was no way my replacement value of a $130,000 home was $210,000. Got them down to $170,000 and saved about $200 on yearly premium. So it might be possible for you to get them to come down, at least it did for me.

[unallowable]

Quote:

Originally Posted by Mulligan Concerning overinsuring replacement value of home, my insurer kept sneaking it up each year. I finally had enough, and complained. They first said it was computer models and had to follow it. I took the answer like a sheep, then stewed about it for a day. Called them back the next day and said I was dropping them because there was no way my replacement value of a $130,000 home was $210,000. Got them down to $170,000 and saved about $200 on yearly premium. So it might be possible for you to get them to come down, at least it did for me.

That is exactly where I am today. I have had only one claim in approx 20 yrs with this company and it was small. I keep thinking if they are screwing me on the front end - what happens on the back end when I have a claim? "Oh but we don't cover that, blah, blah". No military background available but I think getting a broker, as someone suggested, to shop the market would be helpful. It represents a significant bill since am mostly debt free - looking toward reduced income in 15 mos - I want to address it now. Hope I can have the success you had.

[Nords]

Quote:

Originally Posted by East Texas Nords had an excellent suggestion - if you're eligible for USAA's insurance, give them a call.

With the caveat that USAA has been pretty gunshy about issuing further policies in Florida. It's worth calling them because their bravery seems to change almost monthly...

[swampwiz]

Quote:

Originally Posted by ziggy29 This seems to be a "growth industry" in property/casualty insurance today: inflating the claimed replacement cost of a home in order to extract more premiums. It seems like a lot of folks are being told they need $350K replacement cost coverage on a $200K house that would take $260K to rebuild. And too often it feels like they include the land value in their estimates of replacement cost, which is silly. And many of them require you to accept their inflated limits if you want other riders or coverage on cost overages.

Having gone through Katrina, I can tell you that in a widespread disaster, building costs can skyrocket. I currently have about $100K coverage on a home that I paid $39K for.

[Moemg]

Quote:

Originally Posted by unallowable I am in North Florida, the house is in Sopchoppy, Florida which is very close to the Gulf. Not sure exactly how many miles but the river is much affected by the tides. One of the reasons I needed input was I fear having the insurance cancelled altogether if I complain too much because of the flood zoning on the new house. This all gives me perspective. Thanks,

You are probably in a top hurricane zone . I would go to an insurance broker . I would also raise my deductible to the highest level . I live on Sarasota Bay and raising my deductible plus shopping around & getting rid of my pool slide lowered my insurance to a reasonable level. Don't fear being cancelled . Someone will always pick you up . I have lived here for ten years and have been cancelled probably six of those .

[unallowable]

Quote:

Originally Posted by Moemg You are probably in a top hurricane zone . I would go to an insurance broker . I would also raise my deductible to the highest level . I live on Sarasota Bay and raising my deductible plus shopping around & getting rid of my pool slide lowered my insurance to a reasonable level. Don't fear being cancelled . Someone will always pick you up . I have lived here for ten years and have been cancelled probably six of those .

True this house is in a hurricane zone even tho this part of Florida has dodged the bullet for quite a few years (no direct hit). Thanks for the reassurance "Don't fear being cancelled". I will get a broker and see what the market looks like elsewhere - then I know my position. I talked to my agent today and he said he would see what he can do. Will see what his best looks like and compare. Thanks,

[meierlde]

A couple of points, on the auto policy and likley on the real property policies you need to have a set level of liability. The umbrella is cheap because it steps in once the claim exceeds the amount of the base policy. How do you think you pay less that 200 a year for $2 million of coverage, it does not include the first 300k or so of loss.

On the flood insurance, its not the companies that do the insurance, its FEMA, the companies all act as agents for FEMA, so the premium on flood insurance should be the same. This is because floods are such wide are things in many cases that no insurance company wants to take the risk. (Just like its becoming on Costal Windstorm) so that the public takes the risk. Recall that for example a number of insurance companies went out of business after 1906 because the earthquake bankrupted them.

[unallowable]

merierlde, I don't so much question the flood insurance I anticipated that it would be expensive and was happy to be able to get it It's the seemingly arbitrary raising of my regular HOI to an amount much higher than appraisal (which includes the land).

The answer probably is somewhere in the comment someone made that market value and replacement value are different.

Perhaps I need to re-think the need for the umbrella coverage. Thanks

[meierlde]

On umbrella coverage look at your net worth as a measure of how much you need. Consider that a high limit umbrella policy ensures that the insurance company will come up with better counsel, and be less willing to settle leaving you holding the bag.
On flood insurance its expensive if you are in a new structure in a flood zone. But you can get an estimate for the flood insurance premium from floodsmart.gov Input the address and it will tell you the risk and the premiums. If your in a preferred risk area (outside 1% flood zone) then the premium is around 400 for 250k.
So you can know what you will pay from the government web site for flood and there is no need to go shopping for it.

[Moemg]

Quote:

Originally Posted by meierlde If your in a preferred risk area (outside 1% flood zone) then the premium is around 400 for 250k. .

$ 400 no way more like $1400

[unallowable]

Wow, The annual flood ins premium is $340 - - house is not new. I will check the site you refer to. I am OK with that amount I think.

The regular property ins is based on liability limit of $95k annually ($1,120). This supposedly cheaper because I have the umbrella. I paid for mostly in cash. I plan to sell a rental property to pay off the balance after I retire in 15 months (counting down months) and my income is less. (capital gains will be less then I hope - maybe a topic for another time). The house was a foreclosure and fulfilled a long time dream of mine to own a place on the river. The whole place - incl 1.75 acres - appraised at less than $60k. I don't think it is the bank that is requiring high coverage.

Perhaps I'm just a cheap b---- and the cost is reasonable. Anyway, the information I have gotten from everyone here is very helpful.

[East Texas]

It may help to separate your issues into sections for the conversation with your agent.

Dwelling coverage - insurance companies insure for replacement cost, not market value, of your house (and not the land). Ask your agent to walk you through the program they use to calculate replacement cost. Make sure all the information in the program (e.g. square feet of rooms, number of bathroom, construction) is correct. Replacement cost coverage for your contents is generally 60% of the dwelling coverage. That number can be increased for a premium.

Flood coverage - It looks like you have a good understanding of it. I can’t remember if the dwelling coverage is replacement or depreciated. Ask your agent.

Auto Physical Damage - if you have older cars, talk to your agent about dropping collision. I really wouldn’t drop comprehensive because it’s inexpensive and covers a myriad of losses (some fool slicing your tires, hail damage - non-collision types of losses). I also wouldn’t consider a comprehensive deductible more than $100. Ask your agent to quote you $100 and $250 deductibles and you’ll see why. The difference is minimal. Auto physical damage is based on market value of the car at the time and place of loss. Your car is always worth less than you think it is in case of a total loss. That’s why it’s important to purchase Gap insurance if you have a loan on a new car.

Liability. Liability is the most important part of any insurance policy. It protects you in case of a situation in which you are legally liable for a loss to property or person. On the auto policy, the people who go for the state minimum on their car insurance find out that it’s just not enough coverage in case of an accident. You can be successfully sued for any damages over and above your liability limits. You have liability coverage under your homeowner’s policy to protect you in case someone is hurt on your property. It’s just not worth risking your financial future to save a few dollars. Liability is the cheapest part of your auto policy if you have a good claims and driving record. I’d rather you drop comp and collision and raise your liability limits if you have to make a decision based on cost. The absolute minimum you should have on your auto liability is 300/500/100 and $300,000 on your homeowner's policy. You should also have MedPay and PIP to cover you and passengers in your car in case of an accident regardless of fault. MedPay is really cheap.

Umbrella. This is always a balancing act. The old rule of thumb was to have liability coverage three times your annual income. That’s pretty much out the window. It needs to be enough to protect you financially. The homeowner’s and auto liability are primary; the umbrella sits on top of them. If you have 300/500/100 on your auto and 300,000 on your homeowner’s plus a $1mil umbrella policy, you have $1.3mil coverage. The umbrella goes a bit further on giving your coverages not in your auto or homeowner’s policies so you need to have a clear understanding of what it does for you. One thing you might want to ask your agent is to see if you can have $1mil on the underlying coverages and that may give you enough of a comfort zone to drop the umbrella. Raising the underlying liability coverages is so inexpensive I’m surprised most people don’t do it. Again it depends on your claims and driving record.

I cannot emphasize enough that having high limits of liability is the key to protecting your financial future whether it be in the underlying policies or with an umbrella. Also, make sure your dwellings are adequately insured for replacement coverage and you understand the deductibles (windstorm usually has a huge deductible). You don't want to have a house fire, a tornado flatten it, or some other type of catastrophic loss and find out you were not adequately covered.

I hope this helps.

[Sarah in SC]

My broker found me coverage through these folks--American Strategic Insurance in St. Petersburg, FL. Might be worth getting a quote as they were cheaper than State Farm for coastal coverage.

[Nords]

Quote:

Originally Posted by meierlde On umbrella coverage look at your net worth as a measure of how much you need.

If I was a litigious lawyer (I know, redundant) then I'd sue people based on their gross worth. I'd let them worry about paying their other debts...

[pb4uski]

Your best courses of action are to shop around, insist on realistic coverage (and move on to another carrier or agent if they don't cooperate), and increase deductibles to self-insure some of the risk.

On the coverage creep issue, I have run into the same thing and just was just insistent about the coverage limits. Essentially, I'm taking the risk myself on the difference.

[East Texas]

While I usually agree on absorbing as much of the risk as possible, with dwelling coverage it's a little different. Read your policy very carefully. If you don't maintain full replacement coverage or if you have less than 80% replacement coverage (mutually exclusive in most cases), you will only get actual cash value instead of replacement coverage in case of a loss. The company might even cancel you if you insist on being below 80% of their replacement coverage calculations.

The deductible gives you some wiggle room and even that has to be reasonable. Doubling your deductible (even if your mortgage company would allow it) might save you very little in the way of premium. That's why a good agent / company is a requisite for the insurance novice.

OTOH, physical damage coverage (comp and collision) are optional with car insurance unless there is a loan on the car. Once again, significantly increasing the deductibles won't proportionately decrease the premium.

What you look for are the discounts. Your agent can discuss all of them with you.

[nwsteve]

If you want to get an "independent" view of your replacement cost on your home, try AccuCoverage® - Replacement Cost Calculator to Help Determine How Much Home Insurance You Need. This is an organization that also commercial analysis and has been around for some time. It cost $8 and will take 15-30 min to complete the survey but you will have results that will give you a solid foundation for discussing your insurance replacement values
Nwsteve

[meierlde]

Quote:

Originally Posted by East Texas The deductible gives you some wiggle room and even that has to be reasonable. Doubling your deductible (even if your mortgage company would allow it) might save you very little in the way of premium. That's why a good agent / company is a requisite for the insurance novice. .

My homeowners company has offered to raise the deductable to 1% from 1000 for other than windstorm and the hail (1% of policy limit) but the numbers they supplied implies no losses for 10 years. (Take the premium reduction and the increase in deductable, divide the deductable increase by the premium decrease and you get the number).

BTW I assume you have auto and home with the same company. Living in the middle of Texas in a small town, the multi line discount pays 70% of the auto insurance (all be it on an old pickup but with collision if I went to no collision or comp then the auto insurance looks like it might come close to being paid by the combined discount)