Insurance for your home

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hoops777
Posts: 4603
Joined: Sun Apr 10, 2011 12:23 pm
Location: Behind the 3 point line

Insurance for your home

Post by hoops777 »

I just switched to AARP Hartford because American Family Connect thru Costco doubled our auto premium because my wife had an accident.
If I stayed our auto,home and umbrella would have been 4100.
Hartford is at 3050.

My question is about the home policy.
My dwelling replacement is 330,000.On my old policy it was 470,000.
However,the Hartford agent says they would try to rebuild our home at 330,000 the same as it was.
If they cannot,they can spend up to another 160,000 to make it the same.
I thought it was odd that they approach it this way vs. insuring it for 490,000.
Is this something to be concerned about?
Never had a policy that did this before.
Thanks
K.I.S.S........so easy to say so difficult to do.
smitcat
Posts: 13304
Joined: Mon Nov 07, 2016 9:51 am

Re: Insurance for your home

Post by smitcat »

What does the actual written policy that you paid for say?
59Gibson
Posts: 1386
Joined: Mon Dec 07, 2020 7:41 am

Re: Insurance for your home

Post by 59Gibson »

Most premium policies do offer a 20-50% increase protection rider. Some ?s for you..do you think their total# is accurate? what is the mkt value of your property, minus land, have you spoken to contractors on replacement cost(per sq ft)
humblecoder
Posts: 1531
Joined: Thu Aug 06, 2020 8:46 am

Re: Insurance for your home

Post by humblecoder »

My homeowner's insurance works similarly.

Based upon the size and features of my home, the insurance company calculated a "replacement cost" which is covered in my base policy. In addition, I have an endorsement for "extended replacement cost" which covers any costs that may occur above and beyond the replacement cost in my base policy.

As I understand it, this provides additional coverage in case the insurance company's replacement cost estimate is too low. My company based the replacement cost on a formula based upon the size and features, but they didn't actually come out and inspect the home, so it was done sight unseen. So this provides some extra "padding" if you will. Also, even if the estimate is accurate, there might be other circumstances that arise that can drive the cost up. For instance, if a tornado comes through and wrecks the entire neighborhood, basic economics dictates that the costs are going to be higher (higher demand for home builders, materials, etc in the local area).

Also, I have an endorsement that covers additional costs due to adhering to building codes. An older house might be excluded from certain building codes that were initiated after the home was built. However, a new home would be subject to these codes and all of the additional costs that this brings.

It sounds like, from what you describe, your new policy has a higher coverage limit. However, you should read the policy for yourself and not rely upon the agent's word. Also, if you still have doubts, see if you can find out if $490K is a reasonable replacement cost for a home like yours. Maybe ask a builder or real estate agent what they think.
Topic Author
hoops777
Posts: 4603
Joined: Sun Apr 10, 2011 12:23 pm
Location: Behind the 3 point line

Re: Insurance for your home

Post by hoops777 »

Yes the added replacement cost would be sufficient, but not the 330,000.
K.I.S.S........so easy to say so difficult to do.
invest4
Posts: 1905
Joined: Wed Apr 24, 2019 2:19 am

Re: Insurance for your home

Post by invest4 »

However the pieces are put together, the most important part is that you are not under-insured.

As mentioned by others, some (many / most?) insurers may also provide some extension which covers bit more. In the end, you will rely on your insurance agent and your own sense of potential risk to assess and decide what makes sense for your home so you can also sleep well at night.
Topic Author
hoops777
Posts: 4603
Joined: Sun Apr 10, 2011 12:23 pm
Location: Behind the 3 point line

Re: Insurance for your home

Post by hoops777 »

Thanks for the replies.
I had had these policies for many years but never had one written this way.
We are good.
K.I.S.S........so easy to say so difficult to do.
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