How to address/fight home owner insurance policy increase

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Mrxyz
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How to address/fight home owner insurance policy increase

Post by Mrxyz » Fri May 18, 2012 11:17 pm

Hi

Recently a national insurance company has increased the premium by increasing the cost to rebuild the home. Their letter has an "important message" which states :
"While the current market value of your home may be lower than you'd lik, the cost to rebuild may be higher than you think.."

My premium has been increased $1000 to $3500!!! per year by mainly increasing the dwelling limits of liability by almost 3 times!

In the last 12 months, I had complete roof replacement by hail damage which was paid in full by them and that is the only claim over the last 10 years that I had the policy and the house.

What options do I have? I do plan to call them up and discuss this further. But they probably do not care. Of course, I would love to switch the company but not sure if others are doing the same thing.

I would also welcome recommendations for other companies with better reputation (if naming them is permitted by forum rules).

Thanks

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FrugalInvestor
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Re: How to address/fight home owner insurance policy increas

Post by FrugalInvestor » Fri May 18, 2012 11:22 pm

The first step I would take is to shop other carriers as you seem to be preparing to do. This will tell you whether your insurance company's increased rates are competitive or not. As far as recommendations for insurance companies to shop I would check JD Power's ratings as well as Consumer Reports.
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HardKnocker
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Re: How to address/fight home owner insurance policy increas

Post by HardKnocker » Sat May 19, 2012 5:24 am

That's quite an increase. Are you near the coast?

Sometimes insurance companies have a change in underwriting strategies and make a decision to remove themselves from certain geographic areas. The increased premium is to get rid of their customers in those markets.
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Mrxyz
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Re: How to address/fight home owner insurance policy increas

Post by Mrxyz » Sat May 19, 2012 7:07 am

No I am not anywhere near the coast. I am in process of refinancing the remaining mortgage with a HEL and added the new bank to the mortgage holder list. But do not think this should affect the policy. I wonder if the insurance company is trying to increase premiums to recoup losses. But, yes, the increase in premium is very hefty.

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Re: How to address/fight home owner insurance policy increas

Post by Sheepdog » Sat May 19, 2012 7:34 am

Gee.. I changed my homeowners insurance this year because it went up $100 to $720. The new one is $548! ...a different life I live.
Just because it isn't your fault doesn't mean it isn't your responsibility....Josh Reid Jones

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Steelersfan
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Re: How to address/fight home owner insurance policy increas

Post by Steelersfan » Sat May 19, 2012 3:05 pm

Here are the results of J.D. Powers' survey of consumer's view of different home owner insurance companies. You have to use the slider bar at the bottom of the list to see all the companies. It might help you narrow down the companies you approach for quotes.

http://www.jdpower.com/consumer-ratings ... =909201166

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Mrxyz
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Re: How to address/fight home owner insurance policy increas

Post by Mrxyz » Sat May 19, 2012 5:22 pm

Great ! Thanks for the link. I appreciate it.
Are there others with similar increase in premiums? Do insurance companies do this especially after recent payments to customers like me for roof replacements?

blacklab
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Re: How to address/fight home owner insurance policy increas

Post by blacklab » Sat May 19, 2012 6:36 pm

Many if not most insurance companies are charging for claims under loss history rating plans filed and approved in individual states. However 40% does sound high for a single claim. Additionally a number of states prohibit charging for weather related claims such as hail, so it is definitely worth double checking with your company as well as looking at the consumer link on your state's insurance department website to see if this is discussed. Good luck.

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Re: How to address/fight home owner insurance policy increas

Post by Quasimodo » Sat May 19, 2012 6:58 pm

If your main concern is disagreement over the insurable value of the house, make sure when you get alternate quotes they are for the same amount of insurance so your comparison is realistic. You could ask for replacement cost estimates from the other companies along with their quotes to see if the replacement cost amount they use is a lot different. Maybe even hire an appraiser on your own to get an independent opinion on replacement cost.

One thing you want to avoid is having a large coinsurance penalty at the time of a loss because the insurer thinks you didn't buy an appropriate amount of coverage, so reach agreement with whichever company you choose as to the insurable value of the house.

Good luck to you!

John
Many wealthy people are little more than janitors of their possessions. | | Frank Lloyd Wright, architect (1867-1959)

paulsiu
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Re: How to address/fight home owner insurance policy increas

Post by paulsiu » Sat May 19, 2012 8:52 pm

Forget about getting your insurer to change their premium. That sort of thing is set by their underwriters. Start shopping around and see if you can get a better rate and double-check the JD power survey as mentioned by the other poster.

To speak from experience, I used to have renters insurance with a particular insurance company for like 5 years. One day, they got sold to another firm. The new owners hike the insurance by 300% because of different underwriting (or may be they just don't want to insure my area any more). I shopped around and got a quote that was actually cheaper than what I originally play.

My current insurance has guarantee replacement, so I am protected from insurable value of the house.

paul

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mike143
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Re: How to address/fight home owner insurance policy increas

Post by mike143 » Sat May 19, 2012 9:12 pm

Speak with your money. USAA if you qualify, Amica if you don't........or others.

Grain of salt: http://www.badfaithinsurance.org/indexdetaillist.html
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Re: How to address/fight home owner insurance policy increas

Post by mephistophles » Sat May 19, 2012 9:38 pm

Mrxyz wrote:Hi

Recently a national insurance company has increased the premium by increasing the cost to rebuild the home. Their letter has an "important message" which states :
"While the current market value of your home may be lower than you'd lik, the cost to rebuild may be higher than you think.."

My premium has been increased $1000 to $3500!!! per year by mainly increasing the dwelling limits of liability by almost 3 times!

In the last 12 months, I had complete roof replacement by hail damage which was paid in full by them and that is the only claim over the last 10 years that I had the policy and the house.

What options do I have? I do plan to call them up and discuss this further. But they probably do not care. Of course, I would love to switch the company but not sure if others are doing the same thing.

I would also welcome recommendations for other companies with better reputation (if naming them is permitted by forum rules).

Thanks
Call your agent or insurance company first to get the details and confirm there has not been a mistake. If this does not resolve the issue to your satisfaction then shop rates with other companies.

ProfessorX
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Re: How to address/fight home owner insurance policy increas

Post by ProfessorX » Mon May 21, 2012 1:54 pm

This just happened to me too. I increased my deductible to $5K (since I plan to self insure for the first $5K), and switched to USAA. My monthly premiums actually went down as a result.

btenny
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AAA much cheaper than Hartford

Post by btenny » Mon May 21, 2012 3:54 pm

I am with AARP/Hartford and just got my latest home policy with a 30% + increase. This is the third year in a row for a big price increase on top of small increases over the previous years. I had a small claim back in late 2009 so I have not price checked them in a while. This year I also got quotes from AllState and AAA and both are more than 50% cheaper than Hartford. We are talking savings of over $1300. I am checking to make sure there are no differences but so far I find all the policies nearly identical. AAA seems to be a little cheaper than Allstate. I will also be moving one of my cars as well. For car insurance the price seems to be about the same from all three. But I get the bundle discount so I will likely be switching both my home and car to AAA.

Any suggestion or issues with AAA versus Allstate or Hartford? Any reason not to like AAA?
Bill

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Mrxyz
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Re: How to address/fight home owner insurance policy increas

Post by Mrxyz » Mon May 21, 2012 8:09 pm

I just got a cheaper rate from Amica insurance with better coverage!!! Their Auto coverage is the same cost though but their umbrella is better and gives me 2% additional discount which makes it about 70% free.They are rated high in consumer satisfaction but I had not heard of them.
Anyone with knowledge or experience with Amica?
Thanks

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Re: How to address/fight home owner insurance policy increas

Post by LadyGeek » Mon May 21, 2012 8:48 pm

Have you heard of the C.L.U.E. (Comprehensive Loss Underwriting Exchange) database? It's used by underwriters to check claims against auto and homeowners insurance. You are entitled to a free report; check the wiki: CLUE database

Think of it as the insurance version of a credit report.
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Re: How to address/fight home owner insurance policy increas

Post by Sheepdog » Tue May 22, 2012 9:33 am

Out of curiosity, mrxyz, do you have a dog? Homeowners insurance rates have been rising for those with dogs, and with certain breeds they are going even higher. There are some breeds which the company will no longer issue homeowners insurance at all.
Just because it isn't your fault doesn't mean it isn't your responsibility....Josh Reid Jones

paulsiu
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Re: How to address/fight home owner insurance policy increas

Post by paulsiu » Tue May 22, 2012 12:47 pm

My insurance agent told me that certain dogs are not insurable. So if you own a pit bull or a chow, chow (!?), then the insurance won't cover you. He indicated that dogs are covered, but only if your dog has a bite incident more than 2 times or something, the insurance won't cover any incident related to the dog.

In the original poster case, I doubt the dog would have affected the cost of rebuilding a house.

Paul

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Mrxyz
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Re: How to address/fight home owner insurance policy increas

Post by Mrxyz » Tue May 22, 2012 8:18 pm

paulsiu wrote:My insurance agent told me that certain dogs are not insurable. So if you own a pit bull or a chow, chow (!?), then the insurance won't cover you. He indicated that dogs are covered, but only if your dog has a bite incident more than 2 times or something, the insurance won't cover any incident related to the dog.

In the original poster case, I doubt the dog would have affected the cost of rebuilding a house.

Paul
No, I have no dogs
LadyGeek wrote:Have you heard of the C.L.U.E. (Comprehensive Loss Underwriting Exchange) database? It's used by underwriters to check claims against auto and homeowners insurance. You are entitled to a free report; check the wiki: CLUE database

Think of it as the insurance version of a credit report.
I did not know this. Thanks for the information
blacklab wrote:Many if not most insurance companies are charging for claims under loss history rating plans filed and approved in individual states. However 40% does sound high for a single claim. Additionally a number of states prohibit charging for weather related claims such as hail, so it is definitely worth double checking with your company as well as looking at the consumer link on your state's insurance department website to see if this is discussed. Good luck.
Yes, called the company and they told me that the increase was for storm damage to the State! So I asked if they will reduce my rates next year if there are fewer storms and of course they could not answer that!!!
No, I will change my insurance company.

Question:
I got good rates from Amica, and they have a mutual fund option for the insurance plan where I get dividend back at the end of the year and thus a lower rate! I did not know this, does everyone know about this option? Do I also pay taxes on the dividend? And finally, I do not qualify for USAA, is there any other company other than Amica which I should get quotes from?
Thanks

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Re: AAA much cheaper than Hartford

Post by nonnie » Tue May 22, 2012 8:36 pm

btenny wrote: Any reason not to like AAA?
Bill
They don't pay their claims? The worst insurance claim process I ever went through was with CSAA (California AAA) when I was insured with them and trying to collect under my uninsured motorist coverage. When they are rated against other companies-- and it may differ in your state-- they tend to come out in the middle of the pack with regard to cost and service.
This post may be monitored for quality assurance purposes.

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Re: How to address/fight home owner insurance policy increas

Post by tomd37 » Tue May 22, 2012 8:40 pm

I had Amica homeowners and auto insurances back in the mid 90's and I remember a dividend at policy year-end being applied. I think it was to the renewal, but am not sure. It could have been a cash dividend/rebate.
Tom D.

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Re: How to address/fight home owner insurance policy increas

Post by rotorhead » Tue May 22, 2012 9:12 pm

This dilemma of rising insurance premiums, when the value of the property has actually decreased, is one that many people are facing now; as real estate values have decreased rather dramatically the past few years, but yet construction costs have supposedly gone up. Some areas of the country have been affected more than others.

A personal note: several years ago the insurer of our second house in another state wanted to increase the insured value of the house by a substantial amount because "the cost of construction had gone up so much", that the insured value "needed to be increased" in order to replace the house in the event of the unthinkable. I did a thorough review of all the property values in the neighborhood - recent sales, property tax assessments, etc; and would not agree to the increase. We debated the matter; then finally they agreed on a value much closer to what I wanted than what they wanted. I think the clincher was when I told the insurance rep that in the event the house burned down, I would just take their check for the insured value, and move away leaving the ashes. I had no intention in re-building a house for a cost 40% more than the finished product would be worth after it was built. They didn't much like that attitude; but I got what I thought was a fair insured amount. We've since sold the house, so no permanent harm done.

We're going through a similar exercise with our house here in Florida now regards our windstorm coverage. We're in the Citizens pool; and they have been fairly aggressively inspecting houses throughout the state to insure all the windstorm protections being claimed are in fact in place, and in some cases re-assessing the rebuilding costs, and increasing premiums accordingly. Their inspector was just here couple of weeks ago to inspect our house. Our policy anniversary date is in August; so I'm looking forward to see what they have to say about our coverage amount, and associated premium. We'll see how we go. If there is anything that might be of interest to the forum then, I'll post it then.

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Mrxyz
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Re: How to address/fight home owner insurance policy increas

Post by Mrxyz » Tue May 22, 2012 10:03 pm

rotorhead wrote:This dilemma of rising insurance premiums, when the value of the property has actually decreased, is one that many people are facing now; as real estate values have decreased rather dramatically the past few years, but yet construction costs have supposedly gone up. Some areas of the country have been affected more than others.

A personal note: several years ago the insurer of our second house in another state wanted to increase the insured value of the house by a substantial amount because "the cost of construction had gone up so much", that the insured value "needed to be increased" in order to replace the house in the event of the unthinkable. I did a thorough review of all the property values in the neighborhood - recent sales, property tax assessments, etc; and would not agree to the increase. We debated the matter; then finally they agreed on a value much closer to what I wanted than what they wanted. I think the clincher was when I told the insurance rep that in the event the house burned down, I would just take their check for the insured value, and move away leaving the ashes. I had no intention in re-building a house for a cost 40% more than the finished product would be worth after it was built. They didn't much like that attitude; but I got what I thought was a fair insured amount. We've since sold the house, so no permanent harm done.

We're going through a similar exercise with our house here in Florida now regards our windstorm coverage. We're in the Citizens pool; and they have been fairly aggressively inspecting houses throughout the state to insure all the windstorm protections being claimed are in fact in place, and in some cases re-assessing the rebuilding costs, and increasing premiums accordingly. Their inspector was just here couple of weeks ago to inspect our house. Our policy anniversary date is in August; so I'm looking forward to see what they have to say about our coverage amount, and associated premium. We'll see how we go. If there is anything that might be of interest to the forum then, I'll post it then.
Thanks for sharing your story.
1) My question is how do you or they calculate the replacement cost of the home??
2) Also, if say for e.g. the home is worth $500,000, and you have insured it for $500,000 (only and not for the replacement cost of $900,000 which the insurance company thinks it costs). And then it burns to ground, I can take the check and buy another home nearby which is about the same age (which will be of the same age as homes are built around the same time in the same neighborhood). I mean, is there anything which forces you to rebuild???
Now if there is nothing which prevents you in taking the check and leaving, why not reduce the cost to replace to $500,000 instead of $900,000 and save money on the premium??
Or am I missing something.

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FrugalInvestor
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Re: How to address/fight home owner insurance policy increas

Post by FrugalInvestor » Tue May 22, 2012 10:25 pm

Mrxyz wrote: 1) My question is how do you or they calculate the replacement cost of the home??
I don't know about this particular company, but I know that others have their own or use third party calculators to estimate the cost of re-building. I have gone through an exercise with both State Farm (my long-time carrier) and The Hartford answering questions about size and construction details resulting in an estimated replacement cost and, therefore, appropriate insured value.
IGNORE the noise! | Our life is frittered away by detail... simplify, simplify. - Henry David Thoreau

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Quasimodo
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Re: How to address/fight home owner insurance policy increas

Post by Quasimodo » Wed May 23, 2012 10:07 am

Mrxyz wrote:
rotorhead wrote:This dilemma of rising insurance premiums, when the value of the property has actually decreased, is one that many people are facing now; as real estate values have decreased rather dramatically the past few years, but yet construction costs have supposedly gone up. Some areas of the country have been affected more than others.

A personal note: several years ago the insurer of our second house in another state wanted to increase the insured value of the house by a substantial amount because "the cost of construction had gone up so much", that the insured value "needed to be increased" in order to replace the house in the event of the unthinkable. I did a thorough review of all the property values in the neighborhood - recent sales, property tax assessments, etc; and would not agree to the increase. We debated the matter; then finally they agreed on a value much closer to what I wanted than what they wanted. I think the clincher was when I told the insurance rep that in the event the house burned down, I would just take their check for the insured value, and move away leaving the ashes. I had no intention in re-building a house for a cost 40% more than the finished product would be worth after it was built. They didn't much like that attitude; but I got what I thought was a fair insured amount. We've since sold the house, so no permanent harm done.

We're going through a similar exercise with our house here in Florida now regards our windstorm coverage. We're in the Citizens pool; and they have been fairly aggressively inspecting houses throughout the state to insure all the windstorm protections being claimed are in fact in place, and in some cases re-assessing the rebuilding costs, and increasing premiums accordingly. Their inspector was just here couple of weeks ago to inspect our house. Our policy anniversary date is in August; so I'm looking forward to see what they have to say about our coverage amount, and associated premium. We'll see how we go. If there is anything that might be of interest to the forum then, I'll post it then.
Thanks for sharing your story.
1) My question is how do you or they calculate the replacement cost of the home??
2) Also, if say for e.g. the home is worth $500,000, and you have insured it for $500,000 (only and not for the replacement cost of $900,000 which the insurance company thinks it costs). And then it burns to ground, I can take the check and buy another home nearby which is about the same age (which will be of the same age as homes are built around the same time in the same neighborhood). I mean, is there anything which forces you to rebuild???
Now if there is nothing which prevents you in taking the check and leaving, why not reduce the cost to replace to $500,000 instead of $900,000 and save money on the premium??
Or am I missing something.
To address the last question, if the insurance company believes the replacement cost is $900,000 but you only buy $500,000 of insurance, then they are only going to pay 5/9ths of any loss you have, whether it is a total loss or a partial loss. (For the sake of offering a clear example, this assumes a replacement cost basis of insurance with a 100% coinsurance clause. There would still be a substantial penalty in the above example even if the coinsurance amount selected was 80% or 90% and if the insurable value was based on depreciated replacement cost, but the general idea is the same.)

It is important for you to carry an amount of insurance that avoids a coinsurance penalty, otherwise there will be bad news for you at the time of a loss. So make sure you are in agreement with the insurance company you choose as to the insurable value basis for the property whether replacement cost or depreciated value (actual cash value).

John
Many wealthy people are little more than janitors of their possessions. | | Frank Lloyd Wright, architect (1867-1959)

Random Poster
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Re: How to address/fight home owner insurance policy increas

Post by Random Poster » Wed May 23, 2012 11:29 am

Mrxyz wrote:Question:
I got good rates from Amica, and they have a mutual fund option for the insurance plan where I get dividend back at the end of the year and thus a lower rate! I did not know this, does everyone know about this option? Do I also pay taxes on the dividend?
I used to have Amica for car and rental insurance. The dividend that you get is based on their last year's claims payout, as I recall. The dividend is not taxable to you.

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Mrxyz
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Re: How to address/fight home owner insurance policy increas

Post by Mrxyz » Wed May 23, 2012 12:17 pm

Random Poster wrote:
Mrxyz wrote:Question:
I got good rates from Amica, and they have a mutual fund option for the insurance plan where I get dividend back at the end of the year and thus a lower rate! I did not know this, does everyone know about this option? Do I also pay taxes on the dividend?
I used to have Amica for car and rental insurance. The dividend that you get is based on their last year's claims payout, as I recall. The dividend is not taxable to you.
Awesome! Thanks for the information. Just switched today to Amica.
I will save close to $1200 / year on my auto and home insurance....if only I had switched earlier....................!!!!!

Thanks

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FrugalInvestor
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Re: How to address/fight home owner insurance policy increas

Post by FrugalInvestor » Wed May 23, 2012 12:45 pm

Mrxyz wrote:
Random Poster wrote:
Mrxyz wrote:Question:
I got good rates from Amica, and they have a mutual fund option for the insurance plan where I get dividend back at the end of the year and thus a lower rate! I did not know this, does everyone know about this option? Do I also pay taxes on the dividend?
I used to have Amica for car and rental insurance. The dividend that you get is based on their last year's claims payout, as I recall. The dividend is not taxable to you.
Awesome! Thanks for the information. Just switched today to Amica.
I will save close to $1200 / year on my auto and home insurance....if only I had switched earlier....................!!!!!

Thanks
Glad it worked out for you. As a general rule I find that it pays to shop everything.
IGNORE the noise! | Our life is frittered away by detail... simplify, simplify. - Henry David Thoreau

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Mrxyz
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Re: How to address/fight home owner insurance policy increas

Post by Mrxyz » Wed May 23, 2012 2:10 pm

I thought I HAD shopped in the past when I first got it and now what I got is not the best deal!!. Maybe I need to reshop every year or few years to see what is the best deal.
Thanks

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Re: How to address/fight home owner insurance policy increas

Post by FrugalInvestor » Wed May 23, 2012 3:14 pm

Mrxyz wrote:I thought I HAD shopped in the past when I first got it and now what I got is not the best deal!!. Maybe I need to reshop every year or few years to see what is the best deal.
Thanks
That is what I do - re-shop every few years.
IGNORE the noise! | Our life is frittered away by detail... simplify, simplify. - Henry David Thoreau

rotorhead
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Re: How to address/fight home owner insurance policy increas

Post by rotorhead » Wed May 23, 2012 4:36 pm

Mrxyz wrote:

rotorhead wrote:This dilemma of rising insurance premiums, when the value of the property has actually decreased, is one that many people are facing now; as real estate values have decreased rather dramatically the past few years, but yet construction costs have supposedly gone up. Some areas of the country have been affected more than others.

A personal note: several years ago the insurer of our second house in another state wanted to increase the insured value of the house by a substantial amount because "the cost of construction had gone up so much", that the insured value "needed to be increased" in order to replace the house in the event of the unthinkable. I did a thorough review of all the property values in the neighborhood - recent sales, property tax assessments, etc; and would not agree to the increase. We debated the matter; then finally they agreed on a value much closer to what I wanted than what they wanted. I think the clincher was when I told the insurance rep that in the event the house burned down, I would just take their check for the insured value, and move away leaving the ashes. I had no intention in re-building a house for a cost 40% more than the finished product would be worth after it was built. They didn't much like that attitude; but I got what I thought was a fair insured amount. We've since sold the house, so no permanent harm done.

We're going through a similar exercise with our house here in Florida now regards our windstorm coverage. We're in the Citizens pool; and they have been fairly aggressively inspecting houses throughout the state to insure all the windstorm protections being claimed are in fact in place, and in some cases re-assessing the rebuilding costs, and increasing premiums accordingly. Their inspector was just here couple of weeks ago to inspect our house. Our policy anniversary date is in August; so I'm looking forward to see what they have to say about our coverage amount, and associated premium. We'll see how we go. If there is anything that might be of interest to the forum then, I'll post it then.



Thanks for sharing your story.
1) My question is how do you or they calculate the replacement cost of the home??
2) Also, if say for e.g. the home is worth $500,000, and you have insured it for $500,000 (only and not for the replacement cost of $900,000 which the insurance company thinks it costs). And then it burns to ground, I can take the check and buy another home nearby which is about the same age (which will be of the same age as homes are built around the same time in the same neighborhood). I mean, is there anything which forces you to rebuild???
Now if there is nothing which prevents you in taking the check and leaving, why not reduce the cost to replace to $500,000 instead of $900,000 and save money on the premium??
Or am I missing something.
I don't have my records from that period, for that house anymore; but the data my insurance company (USAA) was using at the time came from Marhsall & Swift / Boeckh. Apparently they are considered quite knowledgeable in such matters Here's a link to their site: http://www.marshallswift.com/

As I recall USAA wanted to increase the covered amount of the house by something like 40% in accordance with the construction costs provided by M&S/B. In the end we settled on an amount more like 20% over the then covered value. I felt ok with that.

The info supplied by Quasimodo repeated below is quite important to consider. If the spread is too great, you could be in for a very unpleasant surprise if the unthinkable should happen.
To address the last question, if the insurance company believes the replacement cost is $900,000 but you only buy $500,000 of insurance, then they are only going to pay 5/9ths of any loss you have, whether it is a total loss or a partial loss. (For the sake of offering a clear example, this assumes a replacement cost basis of insurance with a 100% coinsurance clause. There would still be a substantial penalty in the above example even if the coinsurance amount selected was 80% or 90% and if the insurable value was based on depreciated replacement cost, but the general idea is the same.)

It is important for you to carry an amount of insurance that avoids a coinsurance penalty, otherwise there will be bad news for you at the time of a loss. So make sure you are in agreement with the insurance company you choose as to the insurable value basis for the property whether replacement cost or depreciated value (actual cash value).

John
From the other responses to your OP, and your subsequent replies, it appears you may have found a solution already. Good luck to you.

Topic Author
Mrxyz
Posts: 660
Joined: Wed Feb 29, 2012 6:12 am

Re: How to address/fight home owner insurance policy increas

Post by Mrxyz » Wed May 23, 2012 5:17 pm

Yes, the problem has resolved (for now) and THANKS to forum members for reading and responding with advice and recommendations. I really appreciate your help.

btenny
Posts: 5221
Joined: Sun Oct 07, 2007 6:47 pm

Re: How to address/fight home owner insurance policy increas

Post by btenny » Wed May 23, 2012 6:05 pm

Regarding rebuilding. Most insurance policies are required by state law to make you rebuild a home after it is destroyed in fire etc. before they pay you. They will pay full value if and only if you rebuild and are adequately insured. You cannot just get the money for your old house and buy another home. If you try to do this the insurance company will depreciate all the contents and components of your house and deduct the land value and give you maybe 50% of the value of your home if you do not rebuild. Similarly they will not pay off your mortgage in an event. That is your responsibility. So if you lose your home to fire etc. and are under insured you may still have a mortgage payment but no home. Plus in most cases you will also have to spend big bucks to get your lot cleared and cleaned up to have the now hazardous waste of the fire removed.....

The state laws require this so that subdivisions and big areas of a town are not left as blown out disaster areas where no one rebuilds. Think what would have happened in California after some of the big quakes and fires in some areas. Or to areas of Florida or the Gulf Coast after huricanes or the mid west after a tornado, etc...

Bill

Topic Author
Mrxyz
Posts: 660
Joined: Wed Feb 29, 2012 6:12 am

Re: How to address/fight home owner insurance policy increas

Post by Mrxyz » Wed May 23, 2012 7:32 pm

btenny wrote:Regarding rebuilding. Most insurance policies are required by state law to make you rebuild a home after it is destroyed in fire etc. before they pay you. They will pay full value if and only if you rebuild and are adequately insured. You cannot just get the money for your old house and buy another home. If you try to do this the insurance company will depreciate all the contents and components of your house and deduct the land value and give you maybe 50% of the value of your home if you do not rebuild. Similarly they will not pay off your mortgage in an event. That is your responsibility. So if you lose your home to fire etc. and are under insured you may still have a mortgage payment but no home. Plus in most cases you will also have to spend big bucks to get your lot cleared and cleaned up to have the now hazardous waste of the fire removed.....

The state laws require this so that subdivisions and big areas of a town are not left as blown out disaster areas where no one rebuilds. Think what would have happened in California after some of the big quakes and fires in some areas. Or to areas of Florida or the Gulf Coast after huricanes or the mid west after a tornado, etc...

Bill
Thanks. I did think "my plan" to leave with the money would be too easy! So getting insured for what it costs to rebuild is worth the money in case of a disaster. Kind of like a disability policy for the home.

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