Allstate Dwelling Protection - Grossly Underestimated

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TiredLawyer
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Allstate Dwelling Protection - Grossly Underestimated

Post by TiredLawyer »

Has anyone with Allstate checked their home dwelling protection limits recently? I think Allstate’s computerized estimator is wrong. In my case, I have reviewed Allstate’s estimator across 2 homes and they seem to estimate replacement cost at about $125 / square foot. Anyone who has done a new build or major renovation lately knows that this is way low.

Anyone have suggestions on how to fix this? I am considering asking Allstate to add a rider that would value my replacement cost closer to $200-$250/ square foot. I am dumbfounded that I have to do this manually and frankly I am no expert at keeping up with build costs over time either. I wonder how many other people may be unwittingly underinsured.
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galawdawg
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Re: Allstate Dwelling Protection - Grossly Underestimated

Post by galawdawg »

Building costs per square foot are very localized and much is dependent upon the home and the materials used. The per square foot cost to rebuild a custom luxury home in a VHCOL area that has heated stone flooring, custom cabinetry and intricate/ornate interior trim, marble countertops, high-end appliances, premium mechanical systems including three or more HVAC systems, distributed audio/video/network wiring, whole-house audio systems, and other such features is much higher than the per square foot cost to rebuild a builder-grade tract home in a LCOL area.

You are correct that homeowners should check their coverage annually to ensure that it is adequate. In fact, Allstate's website says this, "It's important to be aware of how much it would cost to rebuild your home if necessary and keep your insurance agent updated on any upgrades you have made to the property, says the III. You may need to update the limits of your policy to keep up with your needs or with building costs in your area."

Some insurers have available an extended replacement cost endorsement which increases the home's insured value up to 50% above the standard dwelling coverage. You may wish to see if Allstate provides that endorsement.
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TiredLawyer
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Re: Allstate Dwelling Protection - Grossly Underestimated

Post by TiredLawyer »

galawdawg wrote: Thu Jun 10, 2021 4:04 am Building costs per square foot are very localized and much is dependent upon the home and the materials used.
I totally agree with this. But my issue is that Allstate does in fact track local build costs and their computers should have done a better job at estimating this. In my case, nothing in the build quality particularly stands out and they have the info on the construction and number of mechanical systems and ages thereof. I will be calling my agent to discuss shortly.
HomeStretch
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Re: Allstate Dwelling Protection - Grossly Underestimated

Post by HomeStretch »

First check that Allstate has the correct dwelling information (# bedrooms, etc.) used to determine the dwelling limit. Increasing the dwelling limit and/or adding an extended replacement cost endorsement may make sense.

Another option is to move to a guaranteed replacement cost policy. If the insurer undervalues the home (assuming you have provided the correct dwelling info) that’s their issue. Not all insurers offer such a policy (or only offer them on a dwelling value above a certain $ amount) and the policy cost may be higher than your current policy type.

I will be looking into a true replacement cost policy for my upcoming renewal. The current steep price increases for materials/labor makes me doubt that my current extended replacement cost endorsement of 35% is adequate while the high-cost situation persists.
Last edited by HomeStretch on Thu Jun 10, 2021 7:59 am, edited 1 time in total.
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vineviz
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Re: Allstate Dwelling Protection - Grossly Underestimated

Post by vineviz »

TiredLawyer wrote: Thu Jun 10, 2021 4:20 am
galawdawg wrote: Thu Jun 10, 2021 4:04 am Building costs per square foot are very localized and much is dependent upon the home and the materials used.
I totally agree with this. But my issue is that Allstate does in fact track local build costs and their computers should have done a better job at estimating this. In my case, nothing in the build quality particularly stands out and they have the info on the construction and number of mechanical systems and ages thereof. I will be calling my agent to discuss shortly.
Most homeowners do not understand that their insurance policies are not designed to cover the full cost of rebuilding their home, unless they've specifically worked hard to implement that coverage with additional riders, and probably would balk at the premiums required to provide that coverage if it was routinely quoted by default.
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scifilover
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Re: Allstate Dwelling Protection - Grossly Underestimated

Post by scifilover »

TiredLawyer wrote: Thu Jun 10, 2021 3:39 am Has anyone with Allstate checked their home dwelling protection limits recently? I think Allstate’s computerized estimator is wrong. In my case, I have reviewed Allstate’s estimator across 2 homes and they seem to estimate replacement cost at about $125 / square foot. Anyone who has done a new build or major renovation lately knows that this is way low.

Anyone have suggestions on how to fix this? I am considering asking Allstate to add a rider that would value my replacement cost closer to $200-$250/ square foot. I am dumbfounded that I have to do this manually and frankly I am no expert at keeping up with build costs over time either. I wonder how many other people may be unwittingly underinsured.
Another thing to consider is coverage for updates needed to comply with building code changes which is not included in typical policies. Most policies provide for replacement in "like kind and quality". So, if your home has 2x4 wall studs, the code probably now requires 2x6s. The older the home the larger the need.
stan1
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Re: Allstate Dwelling Protection - Grossly Underestimated

Post by stan1 »

Our insurer offers an optional rider for a 25% or 50% supplemental increase in coverage over the amount calculated by their model. They have a separate rider for building code upgrades. We decided to go with the building code and 25%, although in our case the 50% rider was only about $100 per year more than the 25% rider. The 50% rider would have put us at around $400/sq foot which just seems a little high for a 1990s tract house that is not by any means luxurious.

Two factors I'd expect are driving insurers to do this. First, policy pricing is very competitive and people will choose the lowest price without necessarily putting a lot of analysis into the differences which can be difficult to decipher. Second, insurers are trying to cap their losses by putting more decisions like the 25% or 50% overrun cost I cited above back on the insured therby reducing their own exposure to higher replacement costs.
sk.dolcevita
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Re: Allstate Dwelling Protection - Grossly Underestimated

Post by sk.dolcevita »

This topic has been vexing me lately as insurance renewals are due soon.

I got three quotes in addition to renewal premium for my current Allstate policy for an average 1994 home in a MCOL metro.

Provider Coverage amount Per sqft coverage Premium
______________________________________________________
Allstate $400,000 + 25% $186 $1052
Safeco $395,000 + 25% $184 $1058
Geico $487,000 + 25% $227 $1104
Travelers $400,000 + 25% $186 $1307

25% extended dwelling rider is included in the per sqft cost above. Will probably go with Geico.
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celia
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Re: Allstate Dwelling Protection - Grossly Underestimated

Post by celia »

sk.dolcevita wrote: Thu Jun 10, 2021 10:08 am This topic has been vexing me lately as insurance renewals are due soon.

I got three quotes in addition to renewal premium for my current Allstate policy for an average 1994 home in a MCOL metro.

Provider Coverage amount Per sqft coverage Premium
______________________________________________________
Allstate $400,000 + 25% $186 $1052
Safeco $395,000 + 25% $184 $1058
Geico $487,000 + 25% $227 $1104
Travelers $400,000 + 25% $186 $1307

25% extended dwelling rider is included in the per sqft cost above. Will probably go with Geico.
Geico doesn’t really sell homeowners insurance. They subcontract out your bid to third parties, many of which are not companies you’ve probably ever heard of. And if you want a separate liability insurance, that should be from the same company that insures your house/car so that lawsuits are settled seamlessly.

We once had Geico quote us auto, home, liability, and earthquake insurance and it came back as 4 companies. Their personally covered auto was less than what we had but others were more. Since I wanted everything through one carrier, I went elsewhere.
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TexasPE
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Re: Allstate Dwelling Protection - Grossly Underestimated

Post by TexasPE »

vineviz wrote: Thu Jun 10, 2021 7:12 am
Most homeowners do not understand that their insurance policies are not designed to cover the full cost of rebuilding their home,
+1

Retired brother lived in Lake Charles, LA in 2020. They suffered direct hits from hurricanes Laura and Delta. The first totaled his house (per Allstate) and the second made sure there was nothing that could be repaired. Allstate paid him 125% of his dwelling coverage (value of home with sq. ft. and age) and maxed out contents coverage ($100K plus- had a large workshop with various power tools, etc). Coverage did not reflect new construction cost. Also paid 12 months living cost and some other items, including demolition. He sold the lot. Not sure whether windstorm made a difference in payments. Seems similar to auto coverage - insurance 'totals' a car if repair cost is close to market value.

He bought a similar home in Texas (age and sq. ft., away from the coast) and came out OK.
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Topic Author
TiredLawyer
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Re: Allstate Dwelling Protection - Grossly Underestimated

Post by TiredLawyer »

So I talked to my agent. We added over $100k in additional limits to the base coverage instead of opting for the 40% rider. The rationale was that the 40% rider only kicks in for total losses, and not for partial losses. I didn’t want to risk being told that my home was only damaged 80% and capped at the lower limit with the inability to invoke the rider.
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Re: Allstate Dwelling Protection - Grossly Underestimated

Post by Vanguard Fan 1367 »

TiredLawyer wrote: Thu Jun 10, 2021 12:00 pm So I talked to my agent. We added over $100k in additional limits to the base coverage instead of opting for the 40% rider. The rationale was that the 40% rider only kicks in for total losses, and not for partial losses. I didn’t want to risk being told that my home was only damaged 80% and capped at the lower limit with the inability to invoke the rider.
I am glad that your situation got solved. I suspect that other companies you have done business with could sometimes do things better.
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