Protecting your investment. Home owners insurance question

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
Topic Author
primetime
Posts: 74
Joined: Wed Oct 03, 2007 12:52 pm

Protecting your investment. Home owners insurance question

Post by primetime » Mon Feb 11, 2019 7:05 pm

I have a question on protecting my investment, rather than actual investing itself. Not sure if this is an appropriate question for this forum but I figured with so may home owners on here, you guys are experts also on choosing the correct insurance limits to protect your investments so I wanted to get some thoughts on this.

My home can sell for $285k in this market easily. My current home owners insurance policy is written as follows:

Property Location Limit (PLL) $496,800
*Your property location limit is 200% of the estimated residence value of $248,400
*The Property Location Limit is the total amount of insurance on your dwelling, structures other than your dwelling and tangible
personal property at this location excluding any purchased optional increased limits shown on the Coverage Summary. Structures other
than your dwelling are limited to 10% of the Property Location Limit unless optional increased limits are shown on the Coverage
Summary.

Applicable deductibles $1000
Premium $776

Additional coverage and/or increased limits
Replacement Cost Loss Settlement to Roof Surfacing

Back-Up of Sewers or Drains (Your Total Limit is shown) $10,000 Applicable deductible: Per Endorsement Premiums: Included

Additional Living Expense *Up to 24 months not to exceed 75% of Estimated Residence Value (or Tangible Personal Property Limit if a Condo or Renter policy) $186,300 Applicable deductible: See PLL deductible. Premiums: Included

Fair Rental Value *Up to 24 months not to exceed 75% of Estimated Residence Value (or Tangible Personal Property Limit if a Condo or Renter policy) $186,300 Applicable deductible: See PLL deductible. Premiums: Included

Personal Property Plus * Limit is Per Endorsement. Applicable deductible: See PLL deductible. Premiums: Included
Personal Liability *Limit is $500,000. Applicable deductible: See PLL deductible. Premiums: Included
Personal Liability - Mold, Fungus, Wet Rot and Dry Rot. *Limit is $50,000. Applicable deductible: See PLL deductible. Premiums: Included
Medical Expenses *Limit is $5,000. Applicable deductible: See PLL deductible. Premiums: Included
Scheduled Personal Property (SPP) for Jerwlery (Refer to your Schedule for detailed itemization) *Limit is $7,477 Applicable deductible: See PLL deductible. Premiums: $84
Total Residence Premium $860.00

And now the policy premium has been increased from $860 to $954! It started off as $582 in 2014 and has raised each year. Granted the property has gone up in value since it's purchase in 2013 for $230k, but to increase yearly premiums from $582 to $954? Needless to say I'm shopping around.

Here's the quote that Liberty Mutual gave me:

A) Dwelling with Expanded replacement cost - limit $280k
B) other structures on insured location - limit is $28k
C) Personal property with replacement cost - limit is $210k
D) Loss of use of insured location- limit is actual loss sustained
E) Personal liability each occurrence - $500k
F) Medical payments to others $5k

Policy deductibles:
Losses are subject to a deductible of $1k
Losses resulting from water backup are subject to an additional $1k

Additional coverage
Home Protector Plus
Coverage E and F increased limit
Ordinance or Law 10%
Water backup
Scheduled Jewelry $7500

Total yearly premium is $655 per year

Now when I asked my current insurance provider why the need for 200% on the PLL the answer provided was:

For the property location limit; Instead of having separate coverage for each of the below, we add them all together for one big “blanket limit”. Meaning if you go over the designated portion for the dwelling, you can tap into the other structures or personal property coverages to make up the difference; or vice versa.

Coverage A Dwelling +
Coverage B Other structures +
Coverage C personal property +
= property location limit (blanket).

It’s just how we do the packaged home. That is why it is 200% because it includes the other structures coverage and the personal property amounts. So those individual limits are calculated behind the scenes but are added together for the “PLL” on the declarations page. Also, for coverage A, it is not the actual value of the home or market value but rather a calculated replacement cost that is calculated by the carrier depending on the details of the home such as square footage, # of garages, # of baths, # of kitchens, style of home, size of decks/porches and any other details we have on your home. So say someone could paid $150,000 for a home, the cost to completely rebuild, as it stands now, in the event of a total loss will generally exceed that. How much it exceeds it will depend on the specifics and details of the home.

So my question is based on what Liberty Mutual has provided me, should I have them increase the Dwelling with Expanded replacement cost limit to $285k and pull the trigger? Is there anything else I should have them change so that it is more in line with my current policy or is my current policy overkill? We are talking $655 a year vs $954 a year and I'm sure my current insurance will just continue to increase.

ExitStageLeft
Posts: 1577
Joined: Sat Jan 20, 2018 4:02 pm

Re: Protecting your investment. Home owners insurance question

Post by ExitStageLeft » Mon Feb 11, 2019 7:28 pm

I would go with the Liberty Mutual quote. Just make sure the $280k value is what you need. It should represent up to 100% of the replacement cost of the structure not including the lot itself.

Topic Author
primetime
Posts: 74
Joined: Wed Oct 03, 2007 12:52 pm

Re: Protecting your investment. Home owners insurance question

Post by primetime » Mon Feb 11, 2019 7:41 pm

What about cars that are parked in the garage in the event of a total loss? Let's say the cars are worth $60k, do I need to increase the limit from $285k to $345k or is that covered under auto?

Iridium
Posts: 518
Joined: Thu May 19, 2016 10:49 am

Re: Protecting your investment. Home owners insurance question

Post by Iridium » Mon Feb 11, 2019 7:41 pm

Do the two insurance policies cover the same hazards? Your current provider very likely includes 'special form' coverage for both the dwelling and personal property. Ideally, the Liberty policy will have 'special form' coverage for personal property as well. It might be included in the 'Home Protector Plus' but as that is a marketing name, there is no way to be sure without asking the question or referring to the contract (you want to see something along the lines that coverage c applies due to physical loss, except for exceptions listed in section X; you don't want to see a list of reasons when they pay unless the entire section is overridden by a later rider).

Your current insurance provider is correct that the rebuild cost has nothing to do with the market price for the home. The market price has to do with supply and demand of roughly comparable homes. The replacement cost has to do with the cost in labor and materials to clear off the site post-disaster and construct a home to the exact same specifications, except to make it compliant with current building codes. In my area, replacement cost is less than market value because most of the value is in the land. In areas of decreasing population, the market value frequently sinks under replacement cost.

Depending on how good the 'expanded replacement cost' is, it may not matter that much what the dwelling limit is, as the insurance company will pay more than the limit in the event of a total loss. Hopefully the contract makes it clear that the company will pay 25% or even 75% more than the applicable limit. In which case, the $5K you want the limit to increase by would already be inside the quote.

Otherwise, the Liberty policy looks to be as good as the prior plan and in some ways even better. Of course, claims experience could be a different matter.

Iridium
Posts: 518
Joined: Thu May 19, 2016 10:49 am

Re: Protecting your investment. Home owners insurance question

Post by Iridium » Mon Feb 11, 2019 7:44 pm

primetime wrote:
Mon Feb 11, 2019 7:41 pm
What about cars that are parked in the garage in the event of a total loss? Let's say the cars are worth $60k, do I need to increase the limit from $285k to $345k or is that covered under auto?
No. That falls under the auto's comprehensive coverage. A car is not a dwelling and probably does not fall under personal property, so would not be covered by either home insurer, even with raised limits.

Topic Author
primetime
Posts: 74
Joined: Wed Oct 03, 2007 12:52 pm

Re: Protecting your investment. Home owners insurance question

Post by primetime » Mon Feb 11, 2019 7:51 pm

Thanks again! I'll contact Liberty and get the additional details.

User avatar
Nate79
Posts: 5098
Joined: Thu Aug 11, 2016 6:24 pm
Location: Delaware

Re: Protecting your investment. Home owners insurance question

Post by Nate79 » Mon Feb 11, 2019 11:02 pm

How about asking an independant local broker to shop around for you and get you competitive quotes?

Topic Author
primetime
Posts: 74
Joined: Wed Oct 03, 2007 12:52 pm

Re: Protecting your investment. Home owners insurance question

Post by primetime » Mon Feb 11, 2019 11:06 pm

I checked all the local places that had offices like State Farm, Nationwide, AIG, etc and none of them were lower than Liberty Mutual in my area. I did not hit up a local broker that deals with multiple insurers so I may just have to do that.

The insurance game is bs. You sign with a company and then over the course of 5 years, your rates go up 50%. Doesn't matter if you get no tickets, accidents, or claims. Then you find another company and they pull the same crap. The cycle repeats itself. It's just like shopping for cable/internet. They jack the rates and you have to call to negotiate a new monthly fee each year. I'm not interested in that game. I am interested in signing a contract that states my rates cannot exceed a 3% increase each year and being done with it. I'm sure we can all agree that we have better things to do than having to check our insurance rates each year just to be sure we aren't getting screwed.

Nicolas
Posts: 1471
Joined: Wed Aug 22, 2012 7:41 am

Re: Protecting your investment. Home owners insurance question

Post by Nicolas » Mon Feb 11, 2019 11:17 pm

primetime wrote:
Mon Feb 11, 2019 11:06 pm
I checked all the local places that had offices like State Farm, Nationwide, AIG, etc and none of them were lower than Liberty Mutual in my area. I did not hit up a local broker that deals with multiple insurers so I may just have to do that.

The insurance game is bs. You sign with a company and then over the course of 5 years, your rates go up 50%. Then you find another company and they pull the same crap. The cycle repeats itself. It's just like shopping for cable/internet. They jack the rates and you have to call to negotiate a new monthly fee each year. I'm not interested in that game. I am interested in signing a contract that states my rates cannot exceed a 3% increase each year and being done with it. I'm sure we can all agree that we have better things to do than having to check our insurance rates each year just to be sure we aren't getting screwed.
Did you check Safeco? I was with LM for home and auto and Safeco came in significantly lower so I switched to them. I know Safeco is owned by LM so I can’t account for the price difference but there it is.

Topic Author
primetime
Posts: 74
Joined: Wed Oct 03, 2007 12:52 pm

Re: Protecting your investment. Home owners insurance question

Post by primetime » Mon Feb 11, 2019 11:20 pm

Nicolas wrote:
Mon Feb 11, 2019 11:17 pm
primetime wrote:
Mon Feb 11, 2019 11:06 pm
I checked all the local places that had offices like State Farm, Nationwide, AIG, etc and none of them were lower than Liberty Mutual in my area. I did not hit up a local broker that deals with multiple insurers so I may just have to do that.

The insurance game is bs. You sign with a company and then over the course of 5 years, your rates go up 50%. Then you find another company and they pull the same crap. The cycle repeats itself. It's just like shopping for cable/internet. They jack the rates and you have to call to negotiate a new monthly fee each year. I'm not interested in that game. I am interested in signing a contract that states my rates cannot exceed a 3% increase each year and being done with it. I'm sure we can all agree that we have better things to do than having to check our insurance rates each year just to be sure we aren't getting screwed.
Did you check Safeco? I was with LM for home and auto and Safeco came in significantly lower so I switched to them. I know Safeco is owned by LM so I can’t account for the price difference but there it is.
Were the policies, deductibles, limits etc exactly the same?

Nicolas
Posts: 1471
Joined: Wed Aug 22, 2012 7:41 am

Re: Protecting your investment. Home owners insurance question

Post by Nicolas » Mon Feb 11, 2019 11:24 pm

primetime wrote:
Mon Feb 11, 2019 11:20 pm
Nicolas wrote:
Mon Feb 11, 2019 11:17 pm
primetime wrote:
Mon Feb 11, 2019 11:06 pm
I checked all the local places that had offices like State Farm, Nationwide, AIG, etc and none of them were lower than Liberty Mutual in my area. I did not hit up a local broker that deals with multiple insurers so I may just have to do that.

The insurance game is bs. You sign with a company and then over the course of 5 years, your rates go up 50%. Then you find another company and they pull the same crap. The cycle repeats itself. It's just like shopping for cable/internet. They jack the rates and you have to call to negotiate a new monthly fee each year. I'm not interested in that game. I am interested in signing a contract that states my rates cannot exceed a 3% increase each year and being done with it. I'm sure we can all agree that we have better things to do than having to check our insurance rates each year just to be sure we aren't getting screwed.
Did you check Safeco? I was with LM for home and auto and Safeco came in significantly lower so I switched to them. I know Safeco is owned by LM so I can’t account for the price difference but there it is.
Were the policies, deductibles, limits etc exactly the same?
This was a few years ago but from my memory, yes. I wouldn’t have decreased any coverages or raised deductibles. I remember keeping everything constant when I called several companies to get an accurate comparison. The difference in premiums was striking. It’s just come up for renewal so I need to check everything again.

Topic Author
primetime
Posts: 74
Joined: Wed Oct 03, 2007 12:52 pm

Re: Protecting your investment. Home owners insurance question

Post by primetime » Tue Feb 12, 2019 8:34 am

With Liberty, Home Protector Plus coverage provides up to 20%* in excess of the Dwelling coverage amount for repair or replacement of the home and attached structures. Personal Property coverage is expanded to 75% and provides increased coverage limits for jewelry, watches & furs. Losses are settled without deduction for depreciation. Loss of Use coverage is expanded to cover the amount of the actual loss sustained. Inflation protection is included.

User avatar
GMCZ71
Posts: 98
Joined: Sat Oct 13, 2018 8:05 am
Location: McMinnville, Or

Re: Protecting your investment. Home owners insurance question

Post by GMCZ71 » Tue Feb 12, 2019 8:57 am

I am going off my memory but Clark Howard explained the reason insurance should be higher then the selling value is:
-cost of remodel is higher per sq ft then purchase price or new construction
-say new const is 200ft then rebuilding could cost 300ft in his example
-codes and permit fees are higher each yr and house must be brought up to newest
John

User avatar
LadyGeek
Site Admin
Posts: 57380
Joined: Sat Dec 20, 2008 5:34 pm
Location: Philadelphia
Contact:

Re: Protecting your investment. Home owners insurance question

Post by LadyGeek » Tue Feb 12, 2019 4:51 pm

This thread is now in the Personal Finance (Not Investing) forum (insurance).
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

erictiger
Posts: 38
Joined: Fri Apr 07, 2017 7:02 pm

Re: Protecting your investment. Home owners insurance question

Post by erictiger » Tue Feb 12, 2019 5:35 pm

I had a brick house sold for 700K one month ago. American Family had replacement cost for 1.5 million couple years ago. I later switched to AAA which has replacement cost for 1.1 million. So selling price and replacement cost are totally different. The property value assessed by county was 750K.

User avatar
onthecusp
Posts: 713
Joined: Mon Aug 29, 2016 3:25 pm

Re: Protecting your investment. Home owners insurance question

Post by onthecusp » Wed Feb 13, 2019 6:11 pm

erictiger wrote:
Tue Feb 12, 2019 5:35 pm
I had a brick house sold for 700K one month ago. American Family had replacement cost for 1.5 million couple years ago. I later switched to AAA which has replacement cost for 1.1 million. So selling price and replacement cost are totally different. The property value assessed by county was 750K.
So if one was willing to move to a nearby similar house, I'm not sure it makes sense to pay for replacement cost insurance. Of course if you don't rebuild after a fire there will be cleanup and moving costs to add, and whatever you can sell the lot for may balance that in whole or in part.

Nicolas
Posts: 1471
Joined: Wed Aug 22, 2012 7:41 am

Re: Protecting your investment. Home owners insurance question

Post by Nicolas » Wed Feb 13, 2019 6:48 pm

Nicolas wrote:
Mon Feb 11, 2019 11:24 pm
primetime wrote:
Mon Feb 11, 2019 11:20 pm
Nicolas wrote:
Mon Feb 11, 2019 11:17 pm
primetime wrote:
Mon Feb 11, 2019 11:06 pm
I checked all the local places that had offices like State Farm, Nationwide, AIG, etc and none of them were lower than Liberty Mutual in my area. I did not hit up a local broker that deals with multiple insurers so I may just have to do that.

The insurance game is bs. You sign with a company and then over the course of 5 years, your rates go up 50%. Then you find another company and they pull the same crap. The cycle repeats itself. It's just like shopping for cable/internet. They jack the rates and you have to call to negotiate a new monthly fee each year. I'm not interested in that game. I am interested in signing a contract that states my rates cannot exceed a 3% increase each year and being done with it. I'm sure we can all agree that we have better things to do than having to check our insurance rates each year just to be sure we aren't getting screwed.
Did you check Safeco? I was with LM for home and auto and Safeco came in significantly lower so I switched to them. I know Safeco is owned by LM so I can’t account for the price difference but there it is.
Were the policies, deductibles, limits etc exactly the same?
This was a few years ago but from my memory, yes. I wouldn’t have decreased any coverages or raised deductibles. I remember keeping everything constant when I called several companies to get an accurate comparison. The difference in premiums was striking. It’s just come up for renewal so I need to check everything again.
I did some calling around today to compare premiums and AAA came in 10% cheaper than Safeco this time around so I’m probably switching to AAA. I say probably because I still need to hear back from one company.

Most of the savings is in the umbrella, a smaller amount in auto, while homeowners is virtually the same.

Topic Author
primetime
Posts: 74
Joined: Wed Oct 03, 2007 12:52 pm

Re: Protecting your investment. Home owners insurance question

Post by primetime » Thu Mar 07, 2019 7:04 pm

I saved $650 a year switching to liberty from all-state and could save more if I did that monitor system they have called right track, but not sure how I feel about that just yet.

https://insnerds.com/telematics/

retire2022
Posts: 906
Joined: Tue Oct 02, 2018 6:10 pm
Location: NYC

Re: Protecting your investment. Home owners insurance question

Post by retire2022 » Thu Mar 07, 2019 7:19 pm

Op is your house located near a flood zone?

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

Topic Author
primetime
Posts: 74
Joined: Wed Oct 03, 2007 12:52 pm

Re: Protecting your investment. Home owners insurance question

Post by primetime » Thu Mar 07, 2019 7:20 pm

No, it's not in a flood zone.

Post Reply