Author Topic: How can I lower my house insurance?  (Read 3623 times)

ShoulderThingThatGoesUp

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How can I lower my house insurance?
« on: April 15, 2015, 08:53:18 AM »
I had a big claim on a previous residence in 2014 (around $50k) due to a pipe burst when I was out of town. But worse than that, the "replacement value" the companies quite for my house is over the top, from $300,000 to $450,000. Comparable new homes go for no more than $250k and I paid $175k for mine. How do I convince them that they're way off on the replacement value?

NotJen

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Re: How can I lower my house insurance?
« Reply #1 on: April 15, 2015, 09:13:52 AM »
I argue with my insurance company every year over the replacement value. I hate it.

They have a set of questions about the style and quality of your home. I go through the questions every year, giving the same answers. Some years, there is no change in the replacement cost. Some years there is. This year, my original quote was for $241k, and I got it reduced to $214k through the questionnaire process. It reduced my total premium by a measly $130, but still worth it, I guess.

My home is probably worth about $165k.

ETA: I own my home outright, and if there was a total loss (fire, tornado, etc), I would not want to rebuild. Is there any such thing as a policy that would pay out a specific value rather than pay to rebuild?
« Last Edit: April 15, 2015, 09:19:35 AM by NotJen »

ShoulderThingThatGoesUp

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Re: How can I lower my house insurance?
« Reply #2 on: April 15, 2015, 09:23:56 AM »
Are smaller companies more likely to have flexible systems for this, because they are familiar with your sort of house? Anybody have an experience like that?

Bob W

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Re: How can I lower my house insurance?
« Reply #3 on: April 15, 2015, 09:27:37 AM »
I just told my insurer what my number was.   I subtracted the foundation, well, septic, land, and added demolition and haul off. 

Our house is zone 10 (the worst fire rating) and most quotes were in the $300 a month range.   My agent suggested going through a county mutual company.  I did and it ended up being around $90 a month.

So I would suggest you first use an independent agent who works with at least 3-5 companies.   If that quote isn't to your liking then look for a county mutual.  Mine is actually from 3 counties over. 

Keep your deductible high. 

And consider installing a water alarm auto shut off system.   The most common flooding in houses occurs from the washer hook ups and the toilet hook ups.   I had a friend who spent a week in Jamaica and returned home with a full basement of water and mold damage throughout the house for a 250K redo. 

ShoulderThingThatGoesUp

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Re: How can I lower my house insurance?
« Reply #4 on: April 15, 2015, 09:36:21 AM »
In our current house we have a PEX manifold system, and we cut water supply to all fixtures except for the steam heat when we leave for an extended period.

WhatIsFrugalAfterAll

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Re: How can I lower my house insurance?
« Reply #5 on: April 15, 2015, 10:32:04 AM »
In our current house we have a PEX manifold system, and we cut water supply to all fixtures except for the steam heat when we leave for an extended period.

This is a good idea.

For people in cold places, would you also drain the pipes to prevent pipe burst?  Or not sweat it?  A pipe burst with water turned off is most likely just an annoyance, as the pipes only hold a few gallons of water...

Exflyboy

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Re: How can I lower my house insurance?
« Reply #6 on: April 15, 2015, 11:05:21 AM »
I know that washing machine hoses are the worst offenders due to the crap quality of most flex hoses. I went a bought a pair of "floodsafe" hoses ($40 per pair) for my house and the renter's.

I believe that toilet and sink hook ups are less likely to fail due to the smaller diameter (less force on the wall of the hose for the same pressure). and dishwasher hookups are somewhere in between.

IS there much anecdotal evidence of toilet/sink hook ups failing?

ShoulderThingThatGoesUp

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Re: How can I lower my house insurance?
« Reply #7 on: April 15, 2015, 11:16:47 AM »
In our current house we have a PEX manifold system, and we cut water supply to all fixtures except for the steam heat when we leave for an extended period.

This is a good idea.

For people in cold places, would you also drain the pipes to prevent pipe burst?  Or not sweat it?  A pipe burst with water turned off is most likely just an annoyance, as the pipes only hold a few gallons of water...

It's pretty trivial to at least release the pressure, so I cut it off at the manifold and then go through the house and flush all the toilets, open all the sinks, briefly run the showers, etc. Doesn't take more than 20 minutes and the peace of mind is tremendous after the horrible experience we had.

Drifterrider

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Re: How can I lower my house insurance?
« Reply #8 on: April 16, 2015, 07:52:12 AM »
I had a big claim on a previous residence in 2014 (around $50k) due to a pipe burst when I was out of town. But worse than that, the "replacement value" the companies quite for my house is over the top, from $300,000 to $450,000. Comparable new homes go for no more than $250k and I paid $175k for mine. How do I convince them that they're way off on the replacement value?

In the US most insurance companies are quoting you "rebuilding" cost, not replacement cost (although they might use the word replacement).  Do you have a mortgage?  If so, your bank will require enough insurance so they don't lose.

Just bought a rental.  Got the same bit about "need" rebuilding insurance (my rebuild cost would be 150K and my house cost 70K).  I insisted they lower the amount (Got it down to 90K coverage).  BUT, I don't have a mortgage.

ShoulderThingThatGoesUp

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Re: How can I lower my house insurance?
« Reply #9 on: April 16, 2015, 08:39:20 AM »
I had a big claim on a previous residence in 2014 (around $50k) due to a pipe burst when I was out of town. But worse than that, the "replacement value" the companies quite for my house is over the top, from $300,000 to $450,000. Comparable new homes go for no more than $250k and I paid $175k for mine. How do I convince them that they're way off on the replacement value?

In the US most insurance companies are quoting you "rebuilding" cost, not replacement cost (although they might use the word replacement).  Do you have a mortgage?  If so, your bank will require enough insurance so they don't lose.

Just bought a rental.  Got the same bit about "need" rebuilding insurance (my rebuild cost would be 150K and my house cost 70K).  I insisted they lower the amount (Got it down to 90K coverage).  BUT, I don't have a mortgage.

No mortgage. Rebuilding cost simply is not $400,000, or even $250,000.

Drifterrider

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Re: How can I lower my house insurance?
« Reply #10 on: April 16, 2015, 12:32:05 PM »
Then, call around.  Found one agent (Nationwide).

Told them I wanted insurance.  They quoted me at "replacement".  Told them I didn't want that.   They told me I had to have it.  I told them I didn't have to have anything.  Told them they would do business with me or not but I wasn't paying for $150K of coverage.  I only wanted $80K insurance.  They said the bank wouldn't allow that.  I told them I was the bank (I only said no mortgage a few times).  Then they got it, then they quoted me a policy that would cover up to 90K (for $300 less per year).

They asked me what I would do if the house was a total loss.  I told them I'd keep the lot to sale and just go buy another existing house.  I think that thought process just stunned them.

Anyway, got what I wanted.

Spork

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Re: How can I lower my house insurance?
« Reply #11 on: April 16, 2015, 12:57:22 PM »
I know that washing machine hoses are the worst offenders due to the crap quality of most flex hoses. I went a bought a pair of "floodsafe" hoses ($40 per pair) for my house and the renter's.

I believe that toilet and sink hook ups are less likely to fail due to the smaller diameter (less force on the wall of the hose for the same pressure). and dishwasher hookups are somewhere in between.

IS there much anecdotal evidence of toilet/sink hook ups failing?

I've had my ice maker line fail.  Wifey was sitting right next to it when it happened, so damage was limited to what could be repaired with a mop.


HazelStone

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Re: How can I lower my house insurance?
« Reply #12 on: April 16, 2015, 01:12:47 PM »
I had a big claim on a previous residence in 2014 (around $50k) due to a pipe burst when I was out of town. But worse than that, the "replacement value" the companies quite for my house is over the top, from $300,000 to $450,000. Comparable new homes go for no more than $250k and I paid $175k for mine. How do I convince them that they're way off on the replacement value?

As already alluded to, there is the demolition and cleanup costs if your house got leveled by a fire, tornado, etc. Building a subdivision full of homes assembly-line style is also cheaper than building an individual house on a unique site. If you have an appraisal calculating a different value than the insurance company does, fine- you have something to back you up, that they can wave back in your face if there is a dispute later. Just realize that the new home built by MegaHomeBuilder on a bare lot may be apples and oranges compare to a mature, settled neighborhood...and companies like to put in a little splash room because rebuilding costs fluctuate.

There is also usually a coinsurance clause (which has slightly different meaning than it has under health insurance).

Basically, if you insure for less than full replacement cost, if you have a loss, the amount you recover can be reduced proportionally to how much you under-insured.

Simple explanation- I have no afiliation with this site.
http://www.propertyinsurancecoveragelaw.com/2011/09/articles/insurance/what-are-coinsurance-clauses-and-do-courts-enforce-them/

From the insurance agent's perspective, this is a potential legal shit-storm if they sell you a policy under-insuring your property. If you insure a $200,000 building for $100,000, thinking you'll make up the difference out of savings and/or build a smaller place if something happens, you're not going to get $100,000 on that loss. You're getting way less. Even if the company got you to sign waivers up one side and down the other, it's still a screaming client if something bad does happen, they tell their friends, etc. And then they'll sue the agent, or at least try.

Also, your Loss of Use coverage is based off your house's insured value.

If you want to save money on your policy, increase your deductible. Also take a good hard look at the "personal property" coverage on the policy. This is your furniture, clothes, appliances, books, all the Stuff in your house that isn't nailed down.* The default coverage amount is usually a percentage of the building's coverage amount. If you are a true minimalist, you won't have a whole lot of Stuff lying about. But consider that if your place burns down, you don't have time to wait for a Super Duper Closeout on your bed, your work clothes, etc.

Also make sure they have the right "zone" down for your house- how far are you from a hydrant? How far are you from the fire department?

*Jewelry, guns, collectibles, etc. are usually covered separately.

Guess what I did for a few stultifying years? :P (Thank God I got out). Your mileage may vary, see dealer for details, I don't even have my insurance license anymore.