Questions re:home insurace

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doon
Posts: 98
Joined: Tue May 27, 2014 9:25 am

Questions re:home insurace

Post by doon » Fri Jan 12, 2018 10:43 am

Hello Bogleheads - I am shopping for home insurance after realizing I was not adequately protected. :oops:

Here are the questions I am asking when shopping for quotes. Are there any other items that I should include when discussing quotes. Thanks for your feedback in advance. I am in NJ away from coast or rivers. But should I consider flood insurance?

Questions
On what basis did you come up with dwelling value? Will this change after inspection? How can I make sure that we are close to the number being discussed currently?
Is there a cash out option?
Is property coverage on the dwelling and personal property offered on a named peril or " all risks unless excluded" basis?
Is property coverage on the dwelling and personal property provided on an actual cash value basis or replacement cost basis?
Are losses from mildew and mold (both property and liability) covered? If so, for what policy limit?
Are property claims for water back up or sump pump discharge covered? If so, for what limit?
Are property losses from demolition or increased cost of construction due to current building code provisions covered? If so, for what limit?
Is earthquake coverage provided or included?
If you have valuable jewelry, art, or furs, will the insurer cover this on a scheduled basis?
If you have extra hazards such as watercraft, aircraft, dogs, a swiming pool, snowmobiles etc. will the insurer cover this for you?

doon
"Goal - Win the game before the need to retire"

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dm200
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Joined: Mon Feb 26, 2007 2:21 pm
Location: Washington DC area

Re: Questions re:home insurace

Post by dm200 » Fri Jan 12, 2018 11:01 am

doon wrote:
Fri Jan 12, 2018 10:43 am
Hello Bogleheads - I am shopping for home insurance after realizing I was not adequately protected. :oops:
Here are the questions I am asking when shopping for quotes. Are there any other items that I should include when discussing quotes. Thanks for your feedback in advance. I am in NJ away from coast or rivers. But should I consider flood insurance?
Questions
On what basis did you come up with dwelling value? Will this change after inspection? How can I make sure that we are close to the number being discussed currently?
Is there a cash out option?
Is property coverage on the dwelling and personal property offered on a named peril or " all risks unless excluded" basis?
Is property coverage on the dwelling and personal property provided on an actual cash value basis or replacement cost basis?
Are losses from mildew and mold (both property and liability) covered? If so, for what policy limit?
Are property claims for water back up or sump pump discharge covered? If so, for what limit?
Are property losses from demolition or increased cost of construction due to current building code provisions covered? If so, for what limit?
Is earthquake coverage provided or included?
If you have valuable jewelry, art, or furs, will the insurer cover this on a scheduled basis?
If you have extra hazards such as watercraft, aircraft, dogs, a swiming pool, snowmobiles etc. will the insurer cover this for you?
doon
I used the replacement cost calculator with my State farm agent.

What do you mean "cash out" option?

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Pajamas
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Re: Questions re:home insurace

Post by Pajamas » Fri Jan 12, 2018 11:03 am

Most of the questions you are asking depend on the particular policy. Perhaps you would be best served by meeting with an independent insurance broker to discuss the various options and find the best company and policy for you.

To find out if your house is generally subject to flooding, there are maps available, but flood zones are not necessarily absolutely accurate and are being revised in light of recent natural disasters, so be cautious if you are near but not in an area prone to flooding. They can also change due to construction of roads and buildings.

https://msc.fema.gov/portal/search

https://www.njrealtor.com/wp-content/up ... -FINAL.pdf

doon
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Re: Questions re:home insurace

Post by doon » Sat Jan 13, 2018 4:15 pm

dm200 wrote:
Fri Jan 12, 2018 11:01 am


I used the replacement cost calculator with my State farm agent.

What do you mean "cash out" option?
It means that the your insurance policy will give you money (equivalent dwelling value) instead of having to re-build at the same location in case of complete damage.
"Goal - Win the game before the need to retire"

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dm200
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Location: Washington DC area

Re: Questions re:home insurace

Post by dm200 » Sat Jan 13, 2018 4:19 pm

doon wrote:
Sat Jan 13, 2018 4:15 pm
dm200 wrote:
Fri Jan 12, 2018 11:01 am

I used the replacement cost calculator with my State farm agent.
What do you mean "cash out" option?
It means that the your insurance policy will give you money (equivalent dwelling value) instead of having to re-build at the same location in case of complete damage.
OK - could be wrong, but seems to me that would or might be something offered in the unlikely case that the house was totally destroyed or that the full replacement cost was needed.

boglerdude
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Re: Questions re:home insurace

Post by boglerdude » Sun Jan 14, 2018 6:00 am

Wont be easy to find an insurance rep both willing and able to answer all those questions correctly.

Ask for sample polices and study the company websites

Amica, Chubb, and USAA have the highest customer satisfaction. Geico is usually cheapest, and State Farm is in between.

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dwickenh
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Location: Illinois

Re: Questions re:home insurace

Post by dwickenh » Sun Jan 14, 2018 8:48 am

doon wrote:
Fri Jan 12, 2018 10:43 am
Hello Bogleheads - I am shopping for home insurance after realizing I was not adequately protected. :oops:

Here are the questions I am asking when shopping for quotes. Are there any other items that I should include when discussing quotes. Thanks for your feedback in advance. I am in NJ away from coast or rivers. But should I consider flood insurance?

Questions
On what basis did you come up with dwelling value? Will this change after inspection? How can I make sure that we are close to the number being discussed currently?
Is there a cash out option?
Is property coverage on the dwelling and personal property offered on a named peril or " all risks unless excluded" basis?
Is property coverage on the dwelling and personal property provided on an actual cash value basis or replacement cost basis?
Are losses from mildew and mold (both property and liability) covered? If so, for what policy limit?
Are property claims for water back up or sump pump discharge covered? If so, for what limit?
Are property losses from demolition or increased cost of construction due to current building code provisions covered? If so, for what limit?
Is earthquake coverage provided or included?
If you have valuable jewelry, art, or furs, will the insurer cover this on a scheduled basis?
If you have extra hazards such as watercraft, aircraft, dogs, a swiming pool, snowmobiles etc. will the insurer cover this for you?

doon
To answer your questions:

-Dwelling value changes yearly based on inflation(their inflation is higher than SS inflation)

-There is a cash out option- you get paid Actual Cash Value(replacement cost less depreciation for age or condition) until the item or structure is actually replaced.

-Homeowners policies are written as "all risk unless excluded" unless you insist on something else.

- Coverage on dwelling and personal property is typically on replacement cost basis.

- Policies have specific language concerning mold and mildew including exclusions in some cases.

- Some polices include subsurface water back up(sewer back up, not flood) others have it as an option.

- demolition and building code expenses are policy specific- you must read the exclusions.

- earthquake coverage is usually added as an endorsement for additional premium.

-Valuable jewelry, art and furs have a basic coverage in the policy. An endorsement to add additional coverage(higher dollar limits) is available for an extra charge.

- Watercraft and aircraft would require coverage specific to the vehicle- not all included in Homeowners. Mowers and tractors used to maintain the premises would be covered. Dogs and swimming pools are added liability exposures and will add to the premium charged or may cause the Insurance company to refuse to write coverage.

I hope this helps answer some of your questions. Ask an agent any added questions and make sure you read the policy(I know it is boring, but you will be surprised at what you learn)

Retired Insurance claims guy here,

Dan
The market is the most efficient mechanism anywhere in the world for transferring wealth from impatient people to patient people.” | — Warren Buffett

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dm200
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Re: Questions re:home insurace

Post by dm200 » Sun Jan 14, 2018 9:41 am

-Dwelling value changes yearly based on inflation(their inflation is higher than SS inflation)
This happens annually with our State Farm homeowners policy. What seems to happen, though, is that it seems to increase more than replacment cost - so we have needed to reduce the insured amount. On the other hand, the opposite could happen - so it is always a good idea to review the replacement value every few years.

doon
Posts: 98
Joined: Tue May 27, 2014 9:25 am

Re: Questions re:home insurace

Post by doon » Wed Jan 17, 2018 10:41 am

dwickenh wrote:
Sun Jan 14, 2018 8:48 am
doon wrote:
Fri Jan 12, 2018 10:43 am
Hello Bogleheads - I am shopping for home insurance after realizing I was not adequately protected. :oops:

Here are the questions I am asking when shopping for quotes. Are there any other items that I should include when discussing quotes. Thanks for your feedback in advance. I am in NJ away from coast or rivers. But should I consider flood insurance?

Questions
On what basis did you come up with dwelling value? Will this change after inspection? How can I make sure that we are close to the number being discussed currently?
Is there a cash out option?
Is property coverage on the dwelling and personal property offered on a named peril or " all risks unless excluded" basis?
Is property coverage on the dwelling and personal property provided on an actual cash value basis or replacement cost basis?
Are losses from mildew and mold (both property and liability) covered? If so, for what policy limit?
Are property claims for water back up or sump pump discharge covered? If so, for what limit?
Are property losses from demolition or increased cost of construction due to current building code provisions covered? If so, for what limit?
Is earthquake coverage provided or included?
If you have valuable jewelry, art, or furs, will the insurer cover this on a scheduled basis?
If you have extra hazards such as watercraft, aircraft, dogs, a swiming pool, snowmobiles etc. will the insurer cover this for you?

doon
To answer your questions:

-Dwelling value changes yearly based on inflation(their inflation is higher than SS inflation)

-There is a cash out option- you get paid Actual Cash Value(replacement cost less depreciation for age or condition) until the item or structure is actually replaced.

-Homeowners policies are written as "all risk unless excluded" unless you insist on something else.

- Coverage on dwelling and personal property is typically on replacement cost basis.

- Policies have specific language concerning mold and mildew including exclusions in some cases.

- Some polices include subsurface water back up(sewer back up, not flood) others have it as an option.

- demolition and building code expenses are policy specific- you must read the exclusions.

- earthquake coverage is usually added as an endorsement for additional premium.

-Valuable jewelry, art and furs have a basic coverage in the policy. An endorsement to add additional coverage(higher dollar limits) is available for an extra charge.

- Watercraft and aircraft would require coverage specific to the vehicle- not all included in Homeowners. Mowers and tractors used to maintain the premises would be covered. Dogs and swimming pools are added liability exposures and will add to the premium charged or may cause the Insurance company to refuse to write coverage.

I hope this helps answer some of your questions. Ask an agent any added questions and make sure you read the policy(I know it is boring, but you will be surprised at what you learn)

Retired Insurance claims guy here,

Dan

Thanks for the responses. Very helpful!! A couple of additional questions:

1. Here are the quote I have received so far....Travellers ($1862), Amica ($ 1749) and Geico ($787). There is about 50K difference between Amica and Travellers dwelling estimate. But otherwise both are pretty comparable and both are "All Risk" policies. Geico came back with lowest dwelling value (about 100K lower than travellers) but it is a "named peril" policy.

Is there such a big difference in premium for "all risk" vs " named peril".?

2. Also Amica agent kept on insisting that the their coverage is HO5 and hence superior. Is that true? Also how do I tell if a policy is HO3 or HO5?

Doon
"Goal - Win the game before the need to retire"

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dm200
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Joined: Mon Feb 26, 2007 2:21 pm
Location: Washington DC area

Re: Questions re:home insurace

Post by dm200 » Wed Jan 17, 2018 10:51 am

1. Here are the quote I have received so far....Travellers ($1862), Amica ($ 1749) and Geico ($787). There is about 50K difference between Amica and Travellers dwelling estimate. But otherwise both are pretty comparable and both are "All Risk" policies. Geico came back with lowest dwelling value (about 100K lower than travellers) but it is a "named peril" policy.
Big premium differences ... Maybe ask GEICO about named peril and all risk. "Seat of the pants" - I would want all risk. BUT, what do you get for the $1,000 a year.

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dwickenh
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Location: Illinois

Re: Questions re:home insurace

Post by dwickenh » Wed Jan 17, 2018 11:35 am

doon wrote:
Wed Jan 17, 2018 10:41 am
dwickenh wrote:
Sun Jan 14, 2018 8:48 am
doon wrote:
Fri Jan 12, 2018 10:43 am
Hello Bogleheads - I am shopping for home insurance after realizing I was not adequately protected. :oops:

Here are the questions I am asking when shopping for quotes. Are there any other items that I should include when discussing quotes. Thanks for your feedback in advance. I am in NJ away from coast or rivers. But should I consider flood insurance?

Questions
On what basis did you come up with dwelling value? Will this change after inspection? How can I make sure that we are close to the number being discussed currently?
Is there a cash out option?
Is property coverage on the dwelling and personal property offered on a named peril or " all risks unless excluded" basis?
Is property coverage on the dwelling and personal property provided on an actual cash value basis or replacement cost basis?
Are losses from mildew and mold (both property and liability) covered? If so, for what policy limit?
Are property claims for water back up or sump pump discharge covered? If so, for what limit?
Are property losses from demolition or increased cost of construction due to current building code provisions covered? If so, for what limit?
Is earthquake coverage provided or included?
If you have valuable jewelry, art, or furs, will the insurer cover this on a scheduled basis?
If you have extra hazards such as watercraft, aircraft, dogs, a swiming pool, snowmobiles etc. will the insurer cover this for you?

doon
To answer your questions:

-Dwelling value changes yearly based on inflation(their inflation is higher than SS inflation)

-There is a cash out option- you get paid Actual Cash Value(replacement cost less depreciation for age or condition) until the item or structure is actually replaced.

-Homeowners policies are written as "all risk unless excluded" unless you insist on something else.

- Coverage on dwelling and personal property is typically on replacement cost basis.

- Policies have specific language concerning mold and mildew including exclusions in some cases.

- Some polices include subsurface water back up(sewer back up, not flood) others have it as an option.

- demolition and building code expenses are policy specific- you must read the exclusions.

- earthquake coverage is usually added as an endorsement for additional premium.

-Valuable jewelry, art and furs have a basic coverage in the policy. An endorsement to add additional coverage(higher dollar limits) is available for an extra charge.

- Watercraft and aircraft would require coverage specific to the vehicle- not all included in Homeowners. Mowers and tractors used to maintain the premises would be covered. Dogs and swimming pools are added liability exposures and will add to the premium charged or may cause the Insurance company to refuse to write coverage.

I hope this helps answer some of your questions. Ask an agent any added questions and make sure you read the policy(I know it is boring, but you will be surprised at what you learn)

Retired Insurance claims guy here,

Dan

Thanks for the responses. Very helpful!! A couple of additional questions:

1. Here are the quote I have received so far....Travellers ($1862), Amica ($ 1749) and Geico ($787). There is about 50K difference between Amica and Travellers dwelling estimate. But otherwise both are pretty comparable and both are "All Risk" policies. Geico came back with lowest dwelling value (about 100K lower than travellers) but it is a "named peril" policy.

Is there such a big difference in premium for "all risk" vs " named peril".?

2. Also Amica agent kept on insisting that the their coverage is HO5 and hence superior. Is that true? Also how do I tell if a policy is HO3 or HO5?

Doon
HO3 and above are all risk policies in my state. There may be additional advantages to a HO5 but I am not aware of the advantages other than a higher premium and possibly coverage you don't need. I would ask the person that quoted the HO5 what are the advantages over a HO3. The big difference is the evaluation of the house value. All should be looking at replacement cost for the house. Does the house amount from Geico seem to be enough to replace the house if it was a total loss?

For comparison, I insure my residence for 272,000 with all risk coverage for 487.00 per year. 272,000 would rebuild my house today. My coverage is with e-surance, but they may not be competitive in your area. I would probably not insure with a named peril policy as it precludes payment for interior damage unless there is a covered loss on the exterior. All risk will pay unless excluded in the policy.

Good luck,

Dan
The market is the most efficient mechanism anywhere in the world for transferring wealth from impatient people to patient people.” | — Warren Buffett

KT785
Posts: 216
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Re: Questions re:home insurace

Post by KT785 » Wed Jan 17, 2018 11:45 am

dwickenh wrote:
Wed Jan 17, 2018 11:35 am
doon wrote:
Wed Jan 17, 2018 10:41 am
dwickenh wrote:
Sun Jan 14, 2018 8:48 am
doon wrote:
Fri Jan 12, 2018 10:43 am
Hello Bogleheads - I am shopping for home insurance after realizing I was not adequately protected. :oops:

Here are the questions I am asking when shopping for quotes. Are there any other items that I should include when discussing quotes. Thanks for your feedback in advance. I am in NJ away from coast or rivers. But should I consider flood insurance?

Questions
On what basis did you come up with dwelling value? Will this change after inspection? How can I make sure that we are close to the number being discussed currently?
Is there a cash out option?
Is property coverage on the dwelling and personal property offered on a named peril or " all risks unless excluded" basis?
Is property coverage on the dwelling and personal property provided on an actual cash value basis or replacement cost basis?
Are losses from mildew and mold (both property and liability) covered? If so, for what policy limit?
Are property claims for water back up or sump pump discharge covered? If so, for what limit?
Are property losses from demolition or increased cost of construction due to current building code provisions covered? If so, for what limit?
Is earthquake coverage provided or included?
If you have valuable jewelry, art, or furs, will the insurer cover this on a scheduled basis?
If you have extra hazards such as watercraft, aircraft, dogs, a swiming pool, snowmobiles etc. will the insurer cover this for you?

doon
To answer your questions:

-Dwelling value changes yearly based on inflation(their inflation is higher than SS inflation)

-There is a cash out option- you get paid Actual Cash Value(replacement cost less depreciation for age or condition) until the item or structure is actually replaced.

-Homeowners policies are written as "all risk unless excluded" unless you insist on something else.

- Coverage on dwelling and personal property is typically on replacement cost basis.

- Policies have specific language concerning mold and mildew including exclusions in some cases.

- Some polices include subsurface water back up(sewer back up, not flood) others have it as an option.

- demolition and building code expenses are policy specific- you must read the exclusions.

- earthquake coverage is usually added as an endorsement for additional premium.

-Valuable jewelry, art and furs have a basic coverage in the policy. An endorsement to add additional coverage(higher dollar limits) is available for an extra charge.

- Watercraft and aircraft would require coverage specific to the vehicle- not all included in Homeowners. Mowers and tractors used to maintain the premises would be covered. Dogs and swimming pools are added liability exposures and will add to the premium charged or may cause the Insurance company to refuse to write coverage.

I hope this helps answer some of your questions. Ask an agent any added questions and make sure you read the policy(I know it is boring, but you will be surprised at what you learn)

Retired Insurance claims guy here,

Dan

Thanks for the responses. Very helpful!! A couple of additional questions:

1. Here are the quote I have received so far....Travellers ($1862), Amica ($ 1749) and Geico ($787). There is about 50K difference between Amica and Travellers dwelling estimate. But otherwise both are pretty comparable and both are "All Risk" policies. Geico came back with lowest dwelling value (about 100K lower than travellers) but it is a "named peril" policy.

Is there such a big difference in premium for "all risk" vs " named peril".?

2. Also Amica agent kept on insisting that the their coverage is HO5 and hence superior. Is that true? Also how do I tell if a policy is HO3 or HO5?

Doon
HO3 and above are all risk policies in my state. There may be additional advantages to a HO5 but I am not aware of the advantages other than a higher premium and possibly coverage you don't need. I would ask the person that quoted the HO5 what are the advantages over a HO3. The big difference is the evaluation of the house value. All should be looking at replacement cost for the house. Does the house amount from Geico seem to be enough to replace the house if it was a total loss?

For comparison, I insure my residence for 272,000 with all risk coverage for 487.00 per year. 272,000 would rebuild my house today. My coverage is with e-surance, but they may not be competitive in your area. I would probably not insure with a named peril policy as it precludes payment for interior damage unless there is a covered loss on the exterior. All risk will pay unless excluded in the policy.

Good luck,

Dan
Typically speaking, HO3 coverage is open peril (all risk, except for specific exclusions) for the physical structure, but named perils for contents; HO5 is open peril (all risk) for both structure and contents.

I wouldn't personally buy policy with named perils coverage for the structure (likely an HO1 or HO2 policy) and would only look at HO3 and HO5 policies or proprietary policies with similar coverage. In your situation, the HO5 policy appears cheaper based on the limited quotes you'd provided.

That said, I'd get quotes from other insurers as well--captive like State Farm, Liberty, etc. as well as through an independent agent (though this could be where the Traveler's quote came from). I wouldn't stop at just those three quotes . . . .

Also note, not all carriers use standard HO forms . . . so you'll need to ask more clarifying questions re: open/named perils coverage.

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dm200
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Re: Questions re:home insurace

Post by dm200 » Wed Jan 17, 2018 11:48 am

Note that some companies (like State Farm) have significant discounts when both auto and home are insured by same insurer.

ChicagoBear7
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Re: Questions re:home insurace

Post by ChicagoBear7 » Wed Jan 17, 2018 3:32 pm

Be sure and check what coverage is provided for Ordinance and Law! This covers the cost of bringing your property up to current building codes. These costs are NOT covered by your replacement cost coverage!! Just because you have replacement cost coverage doesn't mean the city will let you build the "same" building again - building codes, electrical codes, plumbing codes, HVAC codes etc. have most likely changed.

Many insurers may include a small amount of Ordinance coverage with their policies, but if you have a significant claim, you may be in for an unexpected problem. Some insurers may allow you to add additional coverage with a rider, while other "high end" insurers (Chubb etc.) include Ordinance coverage - including for any undamaged parts of the house that must be upgraded per code.

As far as HO5 vs. H03, based upon the types of questions you are asking - take the HO5. And avoid Named Peril if at all possible. An "all risk" or "open" policy puts the burden on the insurance company to prove that a loss is specifically excluded per the policy. With "Named Peril", the burden is on the policy holder to prove that the loss was due to a Named Peril.

talzara
Posts: 535
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Re: Questions re:home insurace

Post by talzara » Wed Jan 17, 2018 5:31 pm

doon wrote:
Wed Jan 17, 2018 10:41 am
1. Here are the quote I have received so far....Travellers ($1862), Amica ($ 1749) and Geico ($787). There is about 50K difference between Amica and Travellers dwelling estimate. But otherwise both are pretty comparable and both are "All Risk" policies. Geico came back with lowest dwelling value (about 100K lower than travellers) but it is a "named peril" policy.

Is there such a big difference in premium for "all risk" vs " named peril".?

2. Also Amica agent kept on insisting that the their coverage is HO5 and hence superior. Is that true? Also how do I tell if a policy is HO3 or HO5?
There are three standard types of policies in most states:
  • HO-2: named perils for dwelling and contents
  • HO-3: open perils for dwelling, named perils for contents
  • HO-5: open perils for dwelling and contents
Most people buy HO-3 policies, so most people have named perils coverage for contents.

The actuarial value of the HO-2 policy is 95% of the HO-3 policy. The fact of the matter is that the most common perils are already named in the HO-2.

The actuarial value of the HO-5 policy is 130% of the HO-3 policy. It's not just upgrading contents coverage to open perils. It's a much more comprehensive policy.

GEICO does not underwrite its own homeowners insurance. They sell homeowners policies from other companies. Most insurance companies will not allow GEICO to quote their policies, because they don't want to help a competitor. Since most insurance companies will not sell an HO-2, that GEICO policy is probably underwritten by a lower-quality company. Which one is it?

GEICO's bundling discount is very small, so you're usually better off buying homeowners insurance separately.

doon
Posts: 98
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Re: Questions re:home insurace

Post by doon » Thu Jan 18, 2018 10:40 am

talzara wrote:
Wed Jan 17, 2018 5:31 pm
GEICO does not underwrite its own homeowners insurance. They sell homeowners policies from other companies. Most insurance companies will not allow GEICO to quote their policies, because they don't want to help a competitor. Since most insurance companies will not sell an HO-2, that GEICO policy is probably underwritten by a lower-quality company. Which one is it?

GEICO's bundling discount is very small, so you're usually better off buying homeowners insurance separately.
Now that makes sense. When I was taking the quote from Geico for AUTO the guy kept insisting that customers only get 3% discount for combining auto & home and he almost stopped short of saying that I should purchase AUTO from GEICO but to get HOME from someone else.

I don't know which company was underwriting that home owners. But I will check now that i know the context.Thanks for that info!! :happy

Question: Is GEICO good for auto?
Because their rate was very competitive compared to Amica. I am guessing that even after accounting for loss of multi policy discount I will be better off with Auto from Geico and Home owners & Umbrella from Amica.
"Goal - Win the game before the need to retire"

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dwickenh
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Location: Illinois

Re: Questions re:home insurace

Post by dwickenh » Thu Jan 18, 2018 10:54 am

I had to make the same choice as I quoted with Geico also. I continued my search until I found a company that would bundle both and save money over Geico Auto and separate homeowners.

Do a little more research and obtain more quotes, I think it will pay off in the long run.

Best of luck to you,

Dan
The market is the most efficient mechanism anywhere in the world for transferring wealth from impatient people to patient people.” | — Warren Buffett

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