Homeowners insurance cost

[Bibimbap]

Hi,

My insurance just sent me a bill and it's $500 more than last year. I disagree on what they estimated the cost of rebuilding my house. Can I dispute that with them? If so, how?  I called them already told them that I disagreed but they insist that they use national avg to calculate the cost of rebuilding.

Even if there is a fire, and the house burns to the ground, the average cost per square foot to rebuild (homeguide.com states the cost per square foot range is $100 to $155) would be approximately $475,075 ($155 x 3,065/square footage of house). They estimate it at double that.  I haven't talked to them since I made this calculation.

Is there anything I can do to bring this down?

Thank you!

[Omy]

I spoke with my agent, he came to the house to inspect, and he agreed to drop it quite a bit. If you don't care about replacement cost (and if you don't have a significant mortgage), I think you can reduce the amount to whatever you feel would cover your losses.

I recommend calling other insurance companies and asking them to give you quotes. You can use this info when you talk to your current agent...or jump ship and go with a different insurer.

[Bibimbap]

I spoke with my agent, he came to the house to inspect, and he agreed to drop it quite a bit. If you don't care about replacement cost (and if you don't have a significant mortgage), I think you can reduce the amount to whatever you feel would cover your losses.

I recommend calling other insurance companies and asking them to give you quotes. You can use this info when you talk to your current agent...or jump ship and go with a different insurer.

The jump up was a result of the agent visiting my house. The previous year they didn't come out because of covid, so now they claim after they saw the house it will cost more to rebuild. But I disagree. When I asked why I can't just insure it for the amount I want they said they can't do that.

[NotJen]

I do not miss those homeowners insurance increases.

Every year I would call up my insurance company and disagree with their rebuild cost, which always seemed ridiculous.  Sometimes they would reduce it - one year they asked to reconfirm the information they had on the finishes - I changed nothing, but them hitting the 'calculate' button got me a reduction in the rebuild cost for some reason.  Most years they refused to change it.  I never found a insurer that would let me set the rebuild value.  I did find one (Esurance) that would let me reduce the amount of coverage I had for "outbuildings" - I also argued that with the insurer every year - I didn't have any outbuildings and I never would, but they would not eliminate that coverage.

When considering the cost to rebuild, also include the cost to clean up what is left, which can be significant (or so I've been told).

[Omy]

I spoke with my agent, he came to the house to inspect, and he agreed to drop it quite a bit. If you don't care about replacement cost (and if you don't have a significant mortgage), I think you can reduce the amount to whatever you feel would cover your losses.

I recommend calling other insurance companies and asking them to give you quotes. You can use this info when you talk to your current agent...or jump ship and go with a different insurer.

The jump up was a result of the agent visiting my house. The previous year they didn't come out because of covid, so now they claim after they saw the house it will cost more to rebuild. But I disagree. When I asked why I can't just insure it for the amount I want they said they can't do that.

Then all you can do is shop other companies. I suspect your company will change their tune and find a way to accommodate you rather than lose your business.

[Sibley]

I spoke with my agent, he came to the house to inspect, and he agreed to drop it quite a bit. If you don't care about replacement cost (and if you don't have a significant mortgage), I think you can reduce the amount to whatever you feel would cover your losses.

I recommend calling other insurance companies and asking them to give you quotes. You can use this info when you talk to your current agent...or jump ship and go with a different insurer.

The jump up was a result of the agent visiting my house. The previous year they didn't come out because of covid, so now they claim after they saw the house it will cost more to rebuild. But I disagree. When I asked why I can't just insure it for the amount I want they said they can't do that.

Then all you can do is shop other companies. I suspect your company will change their tune and find a way to accommodate you rather than lose your business.

Ah, I wouldn't be so sure they care if they lose your business. Some of the insurance companies care far more about new policies rather than retention.

[NotJen]

I switched a few times, no insurance company ever cared about keeping my business.

[bacchi]

First, I would caution against using homeguide. It's often behind the times and, in this inflationary environment, that's important. A $300/ft2 cost might be pretty accurate depending on your city/region.

Second, Traveler's lets me set the replacement cost, for whatever reason. It might help that my mortgage is very low compared to the value.

[Bibimbap]

First, I would caution against using homeguide. It's often behind the times and, in this inflationary environment, that's important. A $300/ft2 cost might be pretty accurate depending on your city/region.

Second, Traveler's lets me set the replacement cost, for whatever reason. It might help that my mortgage is very low compared to the value.

I have Traveler's and they wouldn't let me set it my own replacement cost. I don't have a mortgage.

[bacchi]

First, I would caution against using homeguide. It's often behind the times and, in this inflationary environment, that's important. A $300/ft2 cost might be pretty accurate depending on your city/region.

Second, Traveler's lets me set the replacement cost, for whatever reason. It might help that my mortgage is very low compared to the value.

I have Traveler's and they wouldn't let me set it my own replacement cost. I don't have a mortgage.

Well, that makes no sense. If only a 2000 ft2 house gets built with the payout, wtf do they care? There's not a lien holder to complain.

[Bibimbap]

First, I would caution against using homeguide. It's often behind the times and, in this inflationary environment, that's important. A $300/ft2 cost might be pretty accurate depending on your city/region.

Second, Traveler's lets me set the replacement cost, for whatever reason. It might help that my mortgage is very low compared to the value.

I have Traveler's and they wouldn't let me set it my own replacement cost. I don't have a mortgage.

I just talked to them and asked them exactly that and was told that it's illegal for them to insure someone's house for less than what it will cost to rebuild it.
Well, that makes no sense. If only a 2000 ft2 house gets built with the payout, wtf do they care? There's not a lien holder to complain.

[Villanelle]

It's been a while since I redid our insurance, but I think I recall them telling me the number that their actuarial system guessed it would cost to rebuild, and asking me if I was okay with that number (meaning I had a choice). 

At a minimum, I'd call around and speak with other companies both to see if you can get a lower rate for comparable coverage, and to see if other places will let you set the coverage amount for that. 

It's weird that someone with no stake in the property wouldn't be able to cover a smaller amount.  They don't hold a lien or report to anyone who does (since in this case there is no lien/mortgage) so what do they care if they only give you $500 is the place burns to nothing and you just put up a tent with a camp stove?

It's crazy because you could legally have no insurance at all, but if you do get insurance then suddenly you have to have full replacement coverage.  Nonsensical.

I wonder if this is a state-specific thing (where some are required to cover full replacement costs, per their own estimates, and others allow the buyer to set an amount.

[less4success]

My experience with homeowners insurance is that they always offer a great rate the first year, and then the rate gets less competitive each subsequent year.

Unfortunately, the only way to maintain a reasonable market rate is to change insurance companies every couple of years.

So I'd suggest shopping for new insurance.

[neophyte]

I love how I have to have coverage on my garage and outbuildings. The ones that have never existed. And absolutely rediculous contents coverage.

[iluvzbeach]

You might want to check with Amica. That’s who we use & I have to tell them to increase it every year because I feel like they under estimate the re-build costs (even when factoring in the 30% overage they allow.) We’ve used them for 6+ years and have always been amazed at how low their rates are for us.

[merula]

I've worked in the insurance industry for 15+ years.

The reason that you can't insure your house for $100k when it's actually worth $300k, even if you would rebuild a much smaller house, is because most losses are partial losses, and the predicted size of those partial losses is correlated with the full value of the house. A larger house can be expected to have more frequent and more expensive losses than a smaller one, all else equal.

First, I would caution against using homeguide. It's often behind the times and, in this inflationary environment, that's important. A $300/ft2 cost might be pretty accurate depending on your city/region.

Second, Traveler's lets me set the replacement cost, for whatever reason. It might help that my mortgage is very low compared to the value.

I have Traveler's and they wouldn't let me set it my own replacement cost. I don't have a mortgage.

Well, that makes no sense. If only a 2000 ft2 house gets built with the payout, wtf do they care? There's not a lien holder to complain.

I just talked to them and asked them exactly that and was told that it's illegal for them to insure someone's house for less than what it will cost to rebuild it.

Bacchi's initial point about the inflationary environment is correct; insurance companies are seeing rapidly rising costs to repair and replace insured homes, and supply chain issues with materials are also contributing.

The second point about whether you're allowed to pick your own replacement cost may have to do with state regulations. Insurance has virtually no federal regulation, it's all on a state-by-state basis, so while one state might allow a homeowner to pick their valuation, another might say that it's not in the public interest and prohibit it.

It's definitely worth shopping around if you've been with the same carrier for awhile. For those who have Travelers and an independent agent, that's what your agent gets paid their commission for. For anyone who has a carrier like State Farm, Farmers, Allstate, etc, your agent works for the insurance company and so really can't help you shop around, so I'd really recommend contacting an independent agent.

[jnw]

Don't let them use rebuild cost as excuse.  I used to pay like $900 per year with rebuild of $110k, which was  a steal back in 2013.  Then that insurance company over the years tried to increase it every year.. I had to negotiate with them every year like I do with cox cable.  They recently tried to increase it to $1400.   So, I then found Farmer's Insurance deal recently and got it for $967 per year with a rebuild cost of $169k, much more than the $110k rebuild cost and not much more than the $900 I originally paid.

They just automatically start increasing it for no reason for large amounts; using whatever excuse they can try and get away with.  You have to keep shopping homeowner's insurance like you do with your cable / internet or phone bills.  If you shop around for a while you can find a lot better deal.. then leave them in a year if you have to.   I don't expect this $967 to last that long.. I am preparing to go insurance shoppng 9 months from now if I have to.  I expect the worst from them these days. I don't trust them at all.

[affordablehousing]

Ha, $300psf wouldn't build a potting shed where I live, enjoy your low costs. I'm jealous.

[Paper Chaser]

Your replacement cost probably has increased more than you might realize. Material and labor prices have increased significantly in the last 24 months. At the same time, supply of both has decreased, making timelines longer (potentially increasing holding costs during a rebuilding project).

I'd shop around with different companies long before I'd consider lowering my replacement cost.

[economista]

I'd shop around with different companies long before I'd consider lowering my replacement cost.

+1 We had a huge urban wildfire come through a few months ago and hundreds of houses were lost. There have been a lot of news stories recently about how many families can't afford to rebuild because they were drastically underinsured and the replacement costs they were insured for were actually only 1/3 - 1/2 of the actual cost of rebuilding their houses. Part of it is due to the drastic inflation we've had over the past few years, and part is due to changes in the building code that went into effect over the past few years. They are saying the 2021 building code changes alone are adding up to $50k to the cost to rebuild. 

[Villanelle]

Maybe this is the wrong approach, but I'm pretty trusting of my insurance company.  I have no idea what it would cost to rebuild, and I figure they likely do.  It helps that I really like my insurance company (USAA) and feel like they don't try to upsell things.  So if they tell me they estimate replacement costs and $xxx,xxx, that's what I go with.  I would have no idea how to come up with my own number if I wanted to.

[iluvzbeach]

I'd shop around with different companies long before I'd consider lowering my replacement cost.

+1 We had a huge urban wildfire come through a few months ago and hundreds of houses were lost. There have been a lot of news stories recently about how many families can't afford to rebuild because they were drastically underinsured and the replacement costs they were insured for were actually only 1/3 - 1/2 of the actual cost of rebuilding their houses. Part of it is due to the drastic inflation we've had over the past few years, and part is due to changes in the building code that went into effect over the past few years. They are saying the 2021 building code changes alone are adding up to $50k to the cost to rebuild.

Yes, this. Exactly. I mentioned above that I had to ask our insurance company to increase our coverage. We live in a fire prone area and, in fact, had a major fire in September 2020 that destroyed 2,400+ homes in our area. I knew between inflation and housing price increases that our coverage + the 30% buffer wouldn’t begin to rebuild our house. Not to mention the costs for demo & debris removal. We did not want to find ourselves in a position of being woefully underinsured if our house burned down during fire season.