Home Owners Insurance

[jazz4cash]

I am trying to better understand the term replacement cost. I just never thought too much about replacement cost vs. market value vs. assessed value before. Replacement cost may be the most complicated. Two homes with similar characteristics like square footage, lot, # rooms etc. could differ greatly in terms of replacement cost. One may have finer finishes like granite, hardwood, etc. vs formica, vinyl, and carpet. These finishes may be somewhat reflected in market values but not adequately to reflect replacement cost.
My homeowners jumped 90%. Some of the jump was due to unbundling the auto policy. When I shopped around I got a quote from a company that asked way more detailed questions than I was used to. Their replacement cost was on the low side but they backed it up with 150% extended coverage. They also did a fairly thorough on-site inspection of our home. I was really ticked off at first, but it made sense when I thought about it. The premium is 15% less than we paid the old insurer before the jump.

I am still looking into the numbers to decide if we should add more coverage. Also I need to get more comfortable with this insurer. What are the websites/forums with reviews, ratings and commentary from industry insiders?

[Sunset]

I always thought of replacement cost as the worry free choice. My house burns down and they replace everything.

None of that

• "your roof is 20 years old so we only cover 1/2 of it." stuff.
• Your leather couch was originally $2K but a used one 10 yrs old is $300, even if it costs $3,500 now to replace it.
• Your $2K bed mattress, sells for $100 on craigslist or free, so we pay you $100 to get a new one.

[RetiredAndLovingIt]

Quote:

Originally Posted by Sunset I always thought of replacement cost as the worry free choice. My house burns down and they replace everything. None of that "your roof is 20 years old so we only cover 1/2 of it." stuff. Your leather couch was originally $2K but a used one 10 yrs old is $300, even if it costs $3,500 now to replace it. Your $2K bed mattress, sells for $100 on craigslist or free, so we pay you $100 to get a new one.

I had something similar happen to me. It's been 10 years since my big claim but I had and still have replacement coverage. If I remember correctly anything that I had already replaced and had a receipt they paid in full. Anything that I had not yet replaced, they estimated a value and cut me a check for that amount which was a good bit lower than I was expecting. I had one full year to replace all these items and if I paid more than their estimate then I turned in the receipts and they cut me an additional check for the difference. I do agree that it seemed like a bit of a scam at the time and I wasn't happy about it.
Had you actually replaced the items that they undervalued you on?

[jazz4cash]

Quote:

Originally Posted by Sunset I always thought of replacement cost as the worry free choice. My house burns down and they replace everything. None of that "your roof is 20 years old so we only cover 1/2 of it." stuff. Your leather couch was originally $2K but a used one 10 yrs old is $300, even if it costs $3,500 now to replace it. Your $2K bed mattress, sells for $100 on craigslist or free, so we pay you $100 to get a new one.

Replacement cost of furnishings is quite a bit different, I think. If your house burns down you still have the lot but then there’s demo cost to factor in. If it’s HCOL area most of the value could be the lot.

[ownyourfuture]

Quote:

Originally Posted by davidfin Next month I pay my annual home owners insurance premium. My year on year premium increased 35%. My 2600 square foot home is located in the suburbs surrounding Portland in the Pacific Northwest. I’ve made no claims in roughly 25 years. Neighborhood is safe and well maintained. I feel I’m being taken advantage of by the insurance companies. I’ve called around and checked online. Seems all the major insurance companies are raising rates. I’m thinking antitrust investigations are needed. What’s your experience?

My experience is similar. South central Minnesota. Up 27.96% this year.
I've bundled homeowners & auto insurance with American Family since the year I bought the home (1995)
(Zero claims in 28 years - including auto)
I added an umbrella policy about 5 years ago.

*the umbrella policy $ amount isn't included in any of the following figures*

The only other YOY hike that came close was 1999 up 22.20%
(a town about 10 miles away was basically destroyed by a tornado)

Other large hikes
2004: 19%
2009: 20%
2010: 15%
2013: 16%

In 2015 it went up another 10+ percent.
For 2016, I raised my deductible from $500 to 5K. This brought the premium down to $702.00

With the latest hike, it's up to $1,373 basically a double since I raised the deductible.

I'm going to shop around & also have a sit down with my agent.
One thing I've always had a problem with, is the limits for personal property
(on premises) last year's limit was $157,500, the new limit is $174,900

I cannot for the life of me figure out how my personal property on the premises, could be worth anywhere near 1/2 that amount ?
Hopefully the agent can explain that when I meet with him.

[Sunset]

Quote:

Originally Posted by RetiredAndLovingIt I had something similar happen to me. It's been 10 years since my big claim but I had and still have replacement coverage. If I remember correctly anything that I had already replaced and had a receipt they paid in full. Anything that I had not yet replaced, they estimated a value and cut me a check for that amount which was a good bit lower than I was expecting. I had one full year to replace all these items and if I paid more than their estimate then I turned in the receipts and they cut me an additional check for the difference. I do agree that it seemed like a bit of a scam at the time and I wasn't happy about it. Had you actually replaced the items that they undervalued you on?

I was just giving an example. Fortunately for me, my house has never burned down.