Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Is it time to increase my Homeowner's Insurance Coverage ?
Old 04-09-2021, 07:58 PM   #1
Thinks s/he gets paid by the post
 
Join Date: Aug 2014
Location: Chicago West Burbs
Posts: 1,810
Is it time to increase my Homeowner's Insurance Coverage ?

I'm not talking about premium increases in this thread. We are covered to the current value of the home. Most insurer's recommend insuring for replacement costs not market value. I think my policy has a replacement cost section mentioned, at some % over the insured value. I'll have to review it to check. It has been a few years since I really read my policy in detail.

Considering the recent enormous increases in building material costs, I am beginning to wonder if my homeowner's coverage is enough. Has anybody raised their coverage due to the rebuild costs (not fair market value)?
CRLLS is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 04-09-2021, 08:10 PM   #2
Thinks s/he gets paid by the post
 
Join Date: Dec 2014
Location: Huntsville, AL/Helen, GA
Posts: 4,780
If you have replacement value insurance, as most others do, the insurance company is on the hook to replace the home.

I've been critical in the past of insurance companies getting my business with a teaser rate that's low. Look up and 3 years later I'm paying insurance rates based on 30% more than I could purchase the same house for. They claim a computer program tells them what it would cost to rebuild the home. I usually disagree--at least until the cost of wood products just skyrocketed.

If my home burned to the ground and I didn't replace it, the insurance company would only pay me the Actual Cash Value (depreciated) of the home and the ACV of the contents (depreciated for age and value). That's despite my paying rates on double what they'd pay me.

And if you have 2 claims of any kind in 3 years, they'll either cancel you or double your premiums. Try to change companies and you'll find the premiums to be double--if you can even find anyone to take you--and those high rates will last 5 years. Lexis/Nexus has a file on every homeowner that falls under credit reporting laws.

It's a pretty disappointing end of the insurance business. I'm looking for rate increases unless wood prices decrease to previous levels, and that's doubtful.
Bamaman is offline   Reply With Quote
Old 04-09-2021, 09:38 PM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Aug 2004
Location: Laurel, MD
Posts: 5,821
Iíd say contact someone that can review and explain the coverages you have/need. As bamaman says Insurance companies normally have some overlapping coverages to get you to pay for more coverage than you actually need. Replacement cost, overvaluing the property, inflation riders, sewer backup, upgrade to code, etc. Another big variable is wind damage deductible ($ amount vs % of insured amount). A lot depends on the state insurance regulator.
__________________
...with no reasonable expectation for ER, I'm just here auditing the AP class.Retired 8/1/15.
jazz4cash is offline   Reply With Quote
Old 04-09-2021, 10:06 PM   #4
Thinks s/he gets paid by the post
Ready's Avatar
 
Join Date: Mar 2013
Location: Southern California
Posts: 3,677
When we switched from Allstate to Amica we reevaluated the cost to rebuild our home and increased the coverage by about 40%. But that is partially because we were with Allstate for so many years that we just maintained the same value for almost 20 years without adjusting it. There is no automatic process for the insurance company to update the values based on higher building costs. So you have to periodically check in with your broker to see if your limits are still sufficient.
Ready is offline   Reply With Quote
Old 04-10-2021, 11:40 AM   #5
Thinks s/he gets paid by the post
 
Join Date: Aug 2014
Location: Chicago West Burbs
Posts: 1,810
After reviewing my policy closely, I think I am presently covered unless there is a continued increase in building material increases. Looking at a graph of price per bd-ft, the current prices seem to be a just a Covid spike. I have a 20% dwelling rider along with a current building code rider. That should cover it for now.

I am a bit surprised this subject hasn't come up here before, at least that I could find. I do think it is something to keep an eye on under the current situation.

FWIW, per https://fortune.com/2021/03/20/lumbe...-update-march/ :
Attached Images
File Type: png 0bmwB-lumber-price-per-thousand-board-feet-1-1.png (72.6 KB, 36 views)
CRLLS is offline   Reply With Quote
Old 04-10-2021, 11:54 AM   #6
Thinks s/he gets paid by the post
 
Join Date: Jan 2013
Posts: 2,702
A couple of years ago I had this discussion with my State Farm agent. He thought I was crazy to raise the insured amount for a 2,500 sf house to $1,000,000. I pointed out the costs to rebuild in Santa Rosa after the fires were running over $400 per square foot.

I'm considering going to $1,250,000 when it renews this summer...

I just got a notice last week from State Farm that they may hire fire mitigation contractors in the event of a wildfire to come out, cut vegetation away from the house, and spray fire retardant foam on the structure. Really? Happy to let them do that.
Another Reader is offline   Reply With Quote
Old 04-10-2021, 12:31 PM   #7
Recycles dryer sheets
 
Join Date: Jun 2018
Location: Alameda
Posts: 171
We just finished reviewing our homeowners/earthquake policies with our agent. As we live in Northern CA (hi, AnotherReader!) where everywhere is earthquake country, we were way overdue to bring our policies up to date.

Our previous replacement bldg cost was set at $320/sq. ft. I asked our agent what replacement costs are now. She quoted $420/sq. ft. I replied that in view of a massive 2 yr drought and wildfire season - and mind you, we live in a crowded very urban 'big city' in the San Francisco Bay Area - we would be more comfortable with $450/sq. ft.

We debated going to $500/sq. ft. but chose not to. Of course, depending on how bad fire season is this year.......well, it's a possibility for us to consider next year.

Increase was about $900 from our old lower limits. We also increased loss of use from $10K to $150K.

Quake insurance rates springboard off homeowner ins. parameters so that premium also went up accordingly.
zippy2020 is offline   Reply With Quote
Old 04-10-2021, 02:49 PM   #8
Thinks s/he gets paid by the post
 
Join Date: Jan 2013
Posts: 2,702
Quote:
Originally Posted by zippy2020 View Post
We just finished reviewing our homeowners/earthquake policies with our agent. As we live in Northern CA (hi, AnotherReader!) where everywhere is earthquake country, we were way overdue to bring our policies up to date.

Our previous replacement bldg cost was set at $320/sq. ft. I asked our agent what replacement costs are now. She quoted $420/sq. ft. I replied that in view of a massive 2 yr drought and wildfire season - and mind you, we live in a crowded very urban 'big city' in the San Francisco Bay Area - we would be more comfortable with $450/sq. ft.

We debated going to $500/sq. ft. but chose not to. Of course, depending on how bad fire season is this year.......well, it's a possibility for us to consider next year.

Increase was about $900 from our old lower limits. We also increased loss of use from $10K to $150K.

Quake insurance rates springboard off homeowner ins. parameters so that premium also went up accordingly.
We were on the border of the evacuation zone during the fires last August. I was too sick to drive then. That was enough to convince me to raise the coverage. We will see what State Farm says.
Another Reader is offline   Reply With Quote
Old 04-10-2021, 04:10 PM   #9
Thinks s/he gets paid by the post
 
Join Date: Dec 2014
Location: Huntsville, AL/Helen, GA
Posts: 4,780
We bought an 11 year old all brick home last year in like new condition with 2 new HVAC units for $89 per square foot including .88 acre lot.

When I read of those in some locales paying $450 per square foot, I cringe. I'm so thankful that "home" has been a ultra LCOL place my whole life, and that our lifestyle has allowed us to ER so young.
Bamaman is offline   Reply With Quote
Old 04-10-2021, 05:39 PM   #10
Recycles dryer sheets
 
Join Date: Jun 2018
Location: Alameda
Posts: 171
Quote:
Originally Posted by Bamaman View Post
....When I read of those in some locales paying $450 per square foot, I cringe. I'm so thankful that "home" has been a ultra LCOL place my whole life, and that our lifestyle has allowed us to ER so young.
Like most homeowners, what we bought was a bit of a stretch when we were young, but after three+ decades is minimal overhead. The majority of our monthly income is purely discretionary. If we lived in a cheaper area we'd just have more $$$$ to waste on ourselves....and we are trying to downsize our possessions at this point (not too successfully, sometimes!).

Insurance is simply mitigating the risk to one's assets. There was a good long period in our lives when we had very few assets to risk, LOL.

It's all relative. Being a PoC with many LGBTX friends, living here has its advantages, even with a HCOL. And since my spouse and I both retired early with a generous pension and benefits, we cannot find anything to complain about.
zippy2020 is offline   Reply With Quote
Old 04-10-2021, 10:42 PM   #11
Thinks s/he gets paid by the post
 
Join Date: Jan 2013
Posts: 2,702
Quote:
Originally Posted by zippy2020 View Post
Like most homeowners, what we bought was a bit of a stretch when we were young, but after three+ decades is minimal overhead. The majority of our monthly income is purely discretionary. If we lived in a cheaper area we'd just have more $$$$ to waste on ourselves....and we are trying to downsize our possessions at this point (not too successfully, sometimes!).

Insurance is simply mitigating the risk to one's assets. There was a good long period in our lives when we had very few assets to risk, LOL.

It's all relative. Being a PoC with many LGBTX friends, living here has its advantages, even with a HCOL. And since my spouse and I both retired early with a generous pension and benefits, we cannot find anything to complain about.
I had to laugh about being a PoC and feeling comfortable living in Alameda. I grew up in Berkeley, and when I was a small child in the 1950's, the real estate agents in Alameda would not show to black buyers. I remember in third grade, a black family whose daughter was in my class moved into the Oakland Hills golf course area. I came home one afternoon to my parents talking in hushed tones. My mother explained to me that someone had burned a cross on their front lawn and what that meant. Times have changed...
Another Reader is offline   Reply With Quote
Old 04-11-2021, 12:24 AM   #12
Recycles dryer sheets
 
Join Date: Jun 2018
Location: Alameda
Posts: 171
Quote:
Originally Posted by Another Reader View Post
I had to laugh about being a PoC and feeling comfortable living in Alameda. I grew up in Berkeley, and when I was a small child in the 1950's, the real estate agents in Alameda would not show to black buyers. I remember in third grade, a black family whose daughter was in my class moved into the Oakland Hills golf course area. I came home one afternoon to my parents talking in hushed tones. My mother explained to me that someone had burned a cross on their front lawn and what that meant. Times have changed...
I don't think a lot of people realize that Berkeley is still mostly a white city. Alameda, Albany, and El Cerrito have always been heavily Caucasian also. In fact Oakland was only roughly 24% black in the 1960 census.

It was the "redevelopment" of Hunters Point that drove blacks out of SF and across the Bay. And now the gentrification of Oakland is once again driving blacks out. Once the largest minority, their percentage has been dropping every year.

Interestingly, the fastest growing ethnic group in Oakland are the Mayans. I was surprised to read that recently. The East Bay is a rapidly shifting cultural mix.

Considering the high # of incidents of anti-Asian hate crimes in the state, times may have changed but sadly, certain attitudes change very slowly.

Apologies to the OP for going off-topic!
zippy2020 is offline   Reply With Quote
Old 04-11-2021, 08:04 AM   #13
Thinks s/he gets paid by the post
 
Join Date: Jan 2013
Posts: 2,702
Quote:
Originally Posted by Bamaman View Post
We bought an 11 year old all brick home last year in like new condition with 2 new HVAC units for $89 per square foot including .88 acre lot.

When I read of those in some locales paying $450 per square foot, I cringe. I'm so thankful that "home" has been a ultra LCOL place my whole life, and that our lifestyle has allowed us to ER so young.
Try $720 per square foot, based on $1,800,000 for a 2,500 sf house...
Another Reader is offline   Reply With Quote
Old 04-11-2021, 08:11 AM   #14
Thinks s/he gets paid by the post
Ready's Avatar
 
Join Date: Mar 2013
Location: Southern California
Posts: 3,677
I got a quote for $132K to remodel our master bathroom. It came out to almost $1,000 per square foot. I think it’s a combination of higher material costs and a shortage of labor. Apparently a lot of people have been remodeling during the pandemic.
Ready is offline   Reply With Quote
Old 04-11-2021, 11:21 AM   #15
Recycles dryer sheets
 
Join Date: Jun 2018
Location: Alameda
Posts: 171
Quote:
Originally Posted by Ready View Post
I got a quote for $132K to remodel our master bathroom. It came out to almost $1,000 per square foot. I think itís a combination of higher material costs and a shortage of labor. Apparently a lot of people have been remodeling during the pandemic.
Wow! Now THAT is breathtaking!

We always have a lot of 'small job' stuff that as aging homeowners, we would rather hire someone to do. We were fortunate to find a contractor who specializes in small projects (which translates in our area to "under $50K") and she even lives in our neighborhood. Her workers are employees, not subcontractors, an added plus.

Thank goodness she's younger than we are and has no plans to retire, LOL!
zippy2020 is offline   Reply With Quote
Old 04-11-2021, 12:09 PM   #16
Thinks s/he gets paid by the post
 
Join Date: Jan 2013
Posts: 2,702
Quote:
Originally Posted by Ready View Post
I got a quote for $132K to remodel our master bathroom. It came out to almost $1,000 per square foot. I think itís a combination of higher material costs and a shortage of labor. Apparently a lot of people have been remodeling during the pandemic.
I predict a lot of discounted fixers will come on the market in 15 to 20 years... lots of deferred maintenance!
Another Reader is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Homeowner's Insurance-Wind Loss Mitigation Inspection jazz4cash FIRE and Money 4 02-13-2011 03:43 PM
Florida homeowner's insurance MovingtotheCove Life after FIRE 23 12-05-2010 10:41 AM
Homeowner Insurance overcharged on premium Bram Other topics 0 11-13-2010 11:03 AM

» Quick Links

 
All times are GMT -6. The time now is 09:37 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2021, vBulletin Solutions, Inc.