Author Topic: Home Owner's insurance - What to get and how much to get?  (Read 1960 times)

jamesbond007

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Home Owner's insurance - What to get and how much to get?
« on: October 23, 2017, 11:51:00 AM »
I am reviewing my Home Owner's insurance in the wake of the NorCal fires recently. I am not affected but the event made me re-visit my policy to make sure that I am covered.


I live in a town home style Condo built in 1970 in the Bay Area. I purchased this for 440K in 2016 and the property is now worth about $500K. Total lot is 1365sft and living area is 945sft. Here is what my coverage looks like:


Deductible: $500
Coverage Dwelling: $103,000
Personal Property: $25,000
Loss of use: $18,000
Personal liability: $500,000
Medical Payments to others: $1,000
150% Replacement Cost: Yes (Don't know what this is)


I don't know if this will be enough. My roof is covered by HOA and they have their own insurance for it. I will probably add earthquake and flood insurance too. Am I missing anything?

acroy

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Re: Home Owner's insurance - What to get and how much to get?
« Reply #1 on: October 23, 2017, 11:56:13 AM »
Like all insurance:
It is a bet against yourself; so buy as little as possible.
I suggest bare minimum raise the deductible to 1-5%. Should help you keep some of your little green men.

sisto

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Re: Home Owner's insurance - What to get and how much to get?
« Reply #2 on: October 23, 2017, 05:32:58 PM »
I agree with acroy that deductible is really low. You could save a nice chunk by raising it.

jamesbond007

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Re: Home Owner's insurance - What to get and how much to get?
« Reply #3 on: October 23, 2017, 08:07:04 PM »
Well, my intention was to raise the coverage. How do I value my home for insurance purposes so that I can get the appropriate coverage?

KMMK

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Re: Home Owner's insurance - What to get and how much to get?
« Reply #4 on: October 23, 2017, 08:24:50 PM »
Well, my intention was to raise the coverage. How do I value my home for insurance purposes so that I can get the appropriate coverage?

Your broker or agent should be doing that for you. At least that's how it's been where I've lived and worked.

Rocketman

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Re: Home Owner's insurance - What to get and how much to get?
« Reply #5 on: October 23, 2017, 09:28:33 PM »
If your kitchen starts on fire and destroys all your possessions in your condo, are the limits you have enough to start over. Your condo insurance will (if it's like mine) pay for everything that is attached.  Then you will need to prove your losses.

cchrissyy

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Re: Home Owner's insurance - What to get and how much to get?
« Reply #6 on: October 23, 2017, 10:06:33 PM »
I am in a similar situation, just re-evaluated my policies while thinking about fires nearby.

I don't know anything about the cost of rebuilding in a condo situation.  I think the 150% coverage means you have $150k not $100k dwelling. Check on that.


I think you might want more loss of use coverage than that.  if your place burned down, loss of use pays for your hotel or apartment while rebuilding. How many months does it take to rebuild? maybe you want a year's worth? it will be longer if the disaster struck your whole area and contractors are busy. What monthly cost is temporary housing in your town?

I also agree your deductible is uncommonly low and whatever you do, also get quotes to raise it.

25k is enough for most people's possessions, especially with only 945sf.   But still, consider what you have. Check for sub-limits for cash and jewelry, if any.  Make sure your contents coverage is for full replacement cost. Like, if your laptop is stollen it needs to say they pay the full price of a new laptop, not the depreciated/used price. Go ahead and add up the price for all your furniture and kitchen stuff and clothes and electronics, and dial down the personal property coverage if you can. 

While you're thinking about fire (or replacing contents after theft) this is a GREAT time to take photos of everything you own. Literally go room to room, open the drawers and closets and show everything. The pics might really help your memory when filing a claim.

SimpleCycle

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Re: Home Owner's insurance - What to get and how much to get?
« Reply #7 on: October 23, 2017, 10:22:23 PM »
First you need to know what your condo association master policy covers.  Some cover the inside of the unit and some only cover walls out, meaning in case of a loss, you are responsible for the structure and contents of the unit.  If you have "all in" insurance, it does not usually cover any improvements that have been made to the unit.

Based on what you are responsible for, you then have to decide on a coverage amount.  For walls in, you have to estimate what it would cost to rebuild your condo in a worst case scenario.  This has very little to do with the purchase price or value of the unit, although finishes make a difference.  If you're a giant nerd, you might read a construction estimation book and use it to calculate that walls in reconstruction costs about 50% of the price of new construction.  You can then use that to create an estimate of how much structure coverage you need.

Then you determine how much it would cost to replace all your STUFF.  As a Mustachian, this might be much less than the "suggested" amount.  You also have a choice of replacement value coverage or coverage that covers the depreciated cost of your belongings.  If you're feeling ambitious, you can do a home inventory to determine how much your stuff is worth and how much it would cost to replace.

Then there is the liability portion of insurance coverage, which is protection against lawsuits.  If you have substantial assets, you want to make sure you have adequate liability coverage.

Finally, you decide on your deductible.  Higher deductibles lower your premiums and can be paid for out of savings.  You can do an easy calculation of how long you'd have to go claim free before the premium difference would make up the deductible difference.

For me, here's how the math comes out.

1200 sq ft at $75/sq ft = $93,150 in dwelling coverage
$30,000 in personal property replacement with replacement cost coverage (we've only insured what we'd actually replace, so replacement cost makes sense)
$300k in liability insurance (we have an umbrella policy that requires this liability limit)
$1500 deductible
Premium is $344/year

To me, insurance is to insure against losses that you either can't cover or that would cause significant financial hardship.  Condo insurance is bizarre in that depending on how you select your coverages you can either end up way over covered or way under covered.  Honestly, your policy sounds in the ballpark to me.

EarthSurfer

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Re: Home Owner's insurance - What to get and how much to get?
« Reply #8 on: October 24, 2017, 06:19:37 AM »
Condos have some unique issues as others have mentioned. I have lived and owned condos long enough to be exposed to some of the bigger loss risks, and I have been glad I spent a little extra for these coverages:

1. Loss of use coverage for 24 months - Insurance settlement and the city permitting process for a fire rebuild kept me out of my unit for 22 months. My unit had minimal smoke damage but common area damage prevented access. I remained responsible for mortgage payments, HOA fees, and property taxes even though I couldn't access my unit. Insurance paid for a fully furnished equivalent apartment at a cost of $2,100/m.

2. Loss assessment coverage - I carried $20,000 coverage with a $1,000 deductible for about $22/year. While I could abosorb this loss, the coverage was definitely welcome when a heavy rain event caused flooding of multiple garages and elevator equipment rooms resulting in a $16,000 special assessment.

Condos have the problem of shared risk with limited control of the behavior of others.

jamesbond007

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Re: Home Owner's insurance - What to get and how much to get?
« Reply #9 on: October 24, 2017, 08:18:50 AM »
Thanks all for the suggestions. I am making a spreadsheet with all my belongings and taking a note of the cost to replace. I like the idea of taking pictures and I will. I currently don't have earthquake and flood insurance. I am planning to add earthquake insurance since I am in the Bay Area.  It looks like I am on the right path. Just need to raise my deductible and add earthquake insurance. I hope it's a wash after that.

NeonPegasus

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Re: Home Owner's insurance - What to get and how much to get?
« Reply #10 on: October 24, 2017, 09:53:22 AM »
150% replacement cost is based on the idea that it cans cost more to rebuild than just build new. If it does end up costing more than your home is worth to rebuild, your policy will cover the costs up to 150% of the value.

Do you legitimately need flood insurance? Are you near a flood plain or could a hurricane cause enough of a storm surge to inundate your condo? I wouldn't get it just for funsies.

As prior posters suggested, find out what your condo association covers and what you're responsible for. Look into sewer backups and consider getting a rider for it. Basically, if the sewer backs up (like a tree grows into a pipe), who is responsible for fixing everything? It can cause really really bad damage and require a remediation company to come out. It happened to an acquaintance of mind and all told, the backup cost over $25k due to shit water leaking down through floors into computer equipment, etc.

jamesbond007

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Re: Home Owner's insurance - What to get and how much to get?
« Reply #11 on: October 24, 2017, 12:42:55 PM »
150% replacement cost is based on the idea that it cans cost more to rebuild than just build new. If it does end up costing more than your home is worth to rebuild, your policy will cover the costs up to 150% of the value.

Do you legitimately need flood insurance? Are you near a flood plain or could a hurricane cause enough of a storm surge to inundate your condo? I wouldn't get it just for funsies.

As prior posters suggested, find out what your condo association covers and what you're responsible for. Look into sewer backups and consider getting a rider for it. Basically, if the sewer backs up (like a tree grows into a pipe), who is responsible for fixing everything? It can cause really really bad damage and require a remediation company to come out. It happened to an acquaintance of mind and all told, the backup cost over $25k due to shit water leaking down through floors into computer equipment, etc.

Very good point. Will keep that in mind. Thanks for the tip.