In North Carolina homeowner insurance rates are limited, so what good did that do me? I had to sign a waiver acknowledging that I was paying more than the allowed rate for insurance! Good luck finding something less. I also went through the rigamorole of thinking I was overinsured relative to the actual cost of rebuilding, and I actually had an agent tell me it’s always like that - look how when a house burns down they replace it with a house twice as big! (huh???)
The good news (for us) is, 1 year after moving in to our then 11 year old house, with its 11 year old roof, our insurance company paid for a new (upgraded with nicer looking architectural shingles) roof, so we are still ahead of the game.
I’m in the Bermuda Triangle real estate pit of the midwest too, with a 3,300 sf house, only I’m 10 miles away from a paid fire station. I would never with this big of a house. I have insured for less than replacement cost. Same with my rentals. I do carry very high liability insurance; that is the main coverage I want. I also have a $5,000 deductible. I’m not interested in insuring for small claims.
We have Liberty Mutual and I’ve been happy, both with their phone service and their claim payment. They paid $20,000 for hail damage on my roof the first year I was with them and I was very pleased with the claim process.
Market value and cost to rebuild are two entirely different things. When housing prices plummeted in Phoenix in the 2009 recession, rebuilding costs didn’t decrease nearly that much. Unlike cars, each piece of real estate is considered to be unique, so homeowner’s insurance is designed to restore to what you had. Insurance companies took a LOT of flack from under-insuring homes in California (the Oakland Fire) and San Diego (Witch Creek Fire) – so I get the changes they’ve made.
And…my folks had a rental home partially (40=50%) burned down – you would not believe how much more expensive it is to deal with a partial rebuild. Smoke travels along all sorts of conduits, so areas all over the house had to be torn out and wiring and insulation replaced. Personally, I think it would have been easier (and kinder) to bulldoze the whole thing. Smoke remediation of the furnishings was also incredibly expensive, and damage from firefighting was another issue.
Despite all that, I still think it should be the homeowner’s prerogative to choose to insure for just the basics or for a total, historically accurate and glorious rebuild. That is what we do for cars with collision insurance. Considering how expensive my homeowner’s insurance is and how small the chance is that the house will be reduced to matchsticks, I would rather pay a lower premium. If we could reduce our premium to even $5000, we could save quite a bit over the next 10 years that we have a mortgage. $50,000 with compounded interest could rebuild quite a bit of the house.
It can be a community issue, though. They want to see you replace at a level equivalent, more or less, for the neighborhood to maintain an overall value. Nope, that’s not my horsehair plaster or the hand tooled nails. And together, we’re subsidizing all the customers in the pool.
What I don’t get is why my friend, who lives in a somewhat rural area, has a well maintained home, is financially very set, saw her rates jump when she was widowed. It’s not her credit rating, no natural disasters or “acts of God” in her area.
Last year our State Farm HO ins. premium increased again, so I called the agent to see what else we could do to reduce it. After a lot of back and forth about increasing the deductible yet again and questioning the contents coverage (our furniture and other personal possessions are not worth 10% of the value of the replacement value of our house), we finally found some relief. It turned out that if we bought a large umbrella liability policy it would reduce the premiums on our HO and car ins. by more than enough to offset the cost of the umbrella liability coverage.
When we bought this house (newly built), our previous insurance company refused to write the policy because of its size. I was turned down by several other companies before my realtor talked with his ins. agent and arranged for our coverage. That agent has since retired and I don’t much like his replacement but will tolerate him until we eventually downsize.
They want to see a good replacement, then they should actually pay claims in a timely manner. State Farm and Allstate have a terrible reputation after disasters. Here’s a short list of the 10 worst insurance companies. If you want to see the whole report, google the Ten Worst Insurance Companies in America. It’s a PDF (so I can’t link it).
If you have a mortgage you have to have your home insured at a reasonable level to protect the mortgagor’s interest. If you don’t the mortgage company can force place insurance at a much higher cost and charge it back to you.
That list of the ten worst insurance companies is from a personal injury law firm that probably tries to make money by setting companies up for bad faith. I would take it with a grain of salt. If you want some credible information check with your state’s department of insurance.
The report is from the American Association for Justice and is 29 pages long. It is a PDF that I can’t link. It is referenced in the link from the personal injury law firm. Yes, trial lawyers could rename those 10 companies “the ones who butter our bread with their criminal lack of customer service”.
We have Auto Owners.We also have our auto and umbrella through them. We are now down in Georgia but we had also them in Illinois and my Dad has them in Michigan. Their cost for us with $500 deductible,earthquake coverage(I know seems unlikely but the house has been mildly shaken twice) and full replacement cost is cheaper than most of the other companies. Plus and this is a big thing for me when we have had a claim they have handled it right away and our insurance rates did not go up. A couple years ago we had a hail storm our house needed a new roof we got one no problem. That roof cost them around $20,000 to replace. Some of our neighbors had other insurances that drag their feet or wouldn’t replace their roofs. My dad had a tree and power line fall on his garage on Christmas eve this last year in a snow storm. They handled all for him. No problems. IMO the most important thing about insurance is how they handle claims not how much the yearly cost is.
Absolutely. Most people don’t look at it that way, though. And most people don’t even read their policy to know what is and isn’t covered. Insurance companies can’t just deny claims on a whim. If it’s loss as described in the policy, which is a contract, then the claim is paid.
The report was prepared by an organization formerly known as ATLA, a plaintiff’s bar association. It should be taken at face value no more than a report produced by an insurance association. Documents produced by state insurance associations will provide the most objective information.
Don’t laugh about bats. I have a friend who had them and they were apparent very expensive to remove and clean up after. Her insurance did apparently cover it.
@turbo93 , there is something fishy going on. Our insurance went up 39% this year (no claims) and when my husband called to inquire, they said it was due to inflation. Really? We have an antique house that is insured for replacement cost, but inflation hasn’t increased that much.
Be careful about bats, raccoons, etc. in the attic or elsewhere in the house. There are some “pest removal” companies who go around telling homeowners they see signs of intrusion by such critters and then talk the homeowners into paying for their “remediation” services. If the homeowners insurer is not aware of the problem before it is remedied it may not be covered. There are also some such pest companies that have been accused of carrying around caged critters in their trucks that they show homeowners and claim they have removed from their houses. Lots of scam artists in this field.
@greenwitch , doubt the policy excludes animals. I’m not sure what animal or bug to worry about here. I did see a swarm bees fly past our deck while I was on it the other day. Don’t know where they went. It was surrealistic. They did not land here- I think they were with a new queen bee looking for a place to settle. I guess buck damage or mountain lion/bobcat damage might be a possibility. There is really not much natural disasters going on here.