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charlie knighton
09-20-2012, 6:59 PM
my homeowners insurance is going up 80%, that's unblievable, then they tell me that i must carry $100,000 over market value because thats the replacement cost, but then they say i must carry $180,000 on the contents. well i believe i could outfit a home for $50,000 easily. they say i must carry that much insurance and its a virginia state law, i ask for the statue #, and rep said a supervisor would contact me. anybody gone around with insurance company lately?????

Chris Kennedy
09-20-2012, 7:33 PM
Well, living in Virginia, I know nothing of a law saying I have to have 100,000 over market value. Considering housing costs have declined over the years, I doubt that is replacement costs. My insurance is through an outfit that rhymes with Bait Harm. Since we bought our house (5 years ago), our insurance has actually declined a little bit with the depreciation in the housing market. An 80% hike is outrageous (I'll say that only to find out that your insurance rhymes with Kate Charm).

I would say it is time to shop around.


Cheers,

Chris

Mike Henderson
09-20-2012, 7:41 PM
Who's telling you that you need to carry that amount of insurance? The only people I know who care how much insurance you carry is your mortgage holder, and they usually only want enough to pay off the mortgage if the place burns down.

If you own the place free and clear, you should only carry insurance on the replacement value of the buildings. No matter how big the fire, the land will still be there.

Mike

[Also, I would expect that an insurance company will not write insurance for more than the value of the home. If they did, you'd have an incentive to burn the place down.]

charlie knighton
09-20-2012, 7:50 PM
my insurance is with ball estate, subtract i letter on each word

Scott T Smith
09-20-2012, 9:41 PM
You ought to look into Farm Bureau. They insure residences as well as vehicles, and their claim service is amongst the best in the industry. Good rates too.

Dick Latshaw
09-20-2012, 10:08 PM
Just be happy you don't live in Florida.:mad:

Lee Ludden
09-21-2012, 12:45 AM
We have our home and auto policies through Met Life. They have been pretty good to work with the few times it has been necessary.

Larry Edgerton
09-21-2012, 6:39 AM
Replacement cost is higher than Market value in most places.

Here there is no way you can build a house for anywhere near what you can buy one for.

But it has been the industry standard to cover for replacement cost for many years, so if they weren't before?

I'm thinking I may want to be in other hands....

Larry

phil harold
09-21-2012, 7:36 AM
I have had a house fire
trust me you, need to increase you personal belongings and add a rider for all you tools and shop
When the do rebuild they will replace 6 panel doors with hollowcore...
The contractors bids was the same price as my insurance coverage...
So 100,000 plus may not be a bad idea.
How much more does the extra 100 grand cost?
It may be just worth it...

Curt Harms
09-21-2012, 8:30 AM
Well, living in Virginia, I know nothing of a law saying I have to have 100,000 over market value. Considering housing costs have declined over the years, I doubt that is replacement costs. My insurance is through an outfit that rhymes with Bait Harm. Since we bought our house (5 years ago), our insurance has actually declined a little bit with the depreciation in the housing market. An 80% hike is outrageous (I'll say that only to find out that your insurance rhymes with Kate Charm).

I would say it is time to shop around.


Cheers,

Chris

Absolutely, shop around. We switched insurance carriers, property didn't change much but we were able to insure 2 vehicles for what we were paying for one. We actually found our current carrier from a J.D. Power survey. I'm not sure the best known names are necessarily the best deal.

John Pratt
09-21-2012, 10:06 AM
Unless you have a very sparse home, I don't see how it's possible to replace all the contents with $50K. I used to think it wouldn't cost much as well, until I actually went through the house cataloging items. A kitchen alones is a good $20+K for an average size once you throw in dishes etc. Go through each room of the house and price everything in the room to include the contents of your closets, dressers, linens, all the little cubbys, tools, etc. I think a lot of people go in the T.V. room and count the T.V., the stand it is on, and some furniture. But, what about the throw pillows, blankets, knick-knacks, pictures/frames, throw rugs, etc.

As far as the state requiring a minimum amount of coverage, call another insurance company and ask them. If you find that your current agent was less than truthful, it is probably time to find another company anyway.

Rich Engelhardt
09-21-2012, 10:13 AM
Shop around.
Matter of fact,,,,this advice - to shop around - applies to eveyone, no matter how happy you are with your current carrier.

Insurance companies like to raise premiums as a matter of course.
It's always a good idea to shop around every few years just to keep them honest.
Insurance payments have a habit of going up almost unnoticed - especially if you're set up for an automatic payment.

I'd put off talking to the supervisor until after I was armed with apples to apples quotes from other places.

I'm also not aware of anything that requires you to carry full replacement coverage. Most people do since it the better choice,, however, it's not a requirement.
YMMV there by state law and/or a mortage holder.
Our lender requires us to carry full replacemnt value on the house we have a note on. The other four houses we have, we only carry full replacement on them because it's a wiser choice.


Considering housing costs have declined over the years, I doubt that is replacement costs.
Replacment costs have gone way up since both labor and material costs have gone through the roof.
The cost of replacment has little to do with the actual value of the existing house.
(that's a bad way to put it....maybe a better way would be to say the relationship between the market value and the replacment value isn't a one to one tpe of thing)

Probably a bad analogy of one vs the other would be to compare the cost of buying a new car vs the cost of buying all the parts that go into a car and having the local repair shop put them all together.
One of our rentals has a market value that's roughy 1/3 of what the replacement value is.
The other 4 houses we have aren't that extreme, but, they are all well above the going price.
The gap between the two has been getting wider as material costs have gone up and market value has gone down.

Larry Whitlow
09-21-2012, 10:34 AM
I suspect your agent or insurance company rep did not do a good job explaining the situation to you. First, forget market value. Focus on what it costs to rebuild and replace your home. If your home is under-valued you will suffer in the event of a loss (god forbid). Make sure you understand how this works in your policy contract. I would guess that most if not all state insurance departments now have insurance-to-value regulations. That is probably what your contact was referring to. Much of this regulatory emphasis came about when the under insurance problem was highlighted by cat losses which, by simple supply and demand, tend to drive costs up. Re-contact your rep and ask them to explain what happens in the event of a loss if your policy limits are inadequate. If your policy limits have not changed in a number of years then there is a good chance the limit is too low. It sounds like your insurer is going through an insurance-to-value review of policies. Also, in a standard homeowners policy, the contents coverage is a fixed percentage of the building coverage. For example if coverage for your residence is $100K, then contents is $50K. Traditionally the contract says the home will be rebulit with like kind and quality. Unless something has changed recently, that does not include upgrades that are required because building code requirements have changed. I suspect in your neck of the woods the codes have been updated becuase of the wind peril. You may want to ask the company rep if you are covered for code upgrades/enforcement. Finally, the standard policy has some built-in limits for things like firearms, jewelry, etc. These can be increased if you feel it needed. I hope you get this resolved.

Larry Whitlow
09-21-2012, 10:51 AM
I read some of the preceding posts and would like to add that it is important that you understand the coinsurance requirements that are in your insurance contract. If you do not meet these requirements then you are not fully covered, including for partial losses. In simple terms, if you home is insured for say 70% of value, then you are going to become a partner with your insurance company and contribute 30% of the loss amount, including partial losses. Additionally, even full or "guaranteed" replacement cost coverage has caps, meaning you must make sure your coverage limit is adequate.

Rich Engelhardt
09-21-2012, 11:07 AM
Also, in a standard homeowners policy, the contents coverage is a fixed percentage of the building coverage. For example if coverage for your residence is $100K, then contents is $50K.Interesting...I didn't know that was a fixed figure. None of the agents we've had over the years ever mentioned that. I'll have to get our policy out and see what our coverage is vs the replacment value.
I do know that it's amazing how much money there is tied up in the contents - and we're not well off by any stretch.
You accumulate a lot over the years & never really stop to total it all up.
Just the appliances alone add up to a good chunk...

Larry Whitlow
09-21-2012, 11:59 AM
Interesting...I didn't know that was a fixed figure. None of the agents we've had over the years ever mentioned that. I'll have to get our policy out and see what our coverage is vs the replacment value.
I do know that it's amazing how much money there is tied up in the contents - and we're not well off by any stretch.
You accumulate a lot over the years & never really stop to total it all up.
Just the appliances alone add up to a good chunk...

Look at coverage C in your policy. I don't remember the exact percent and don't want to mislead anyone that it is exactly 50% (from my example). Additionally, most companies will provide an option to increase the amount of coverage for personal property. For folks who would be visiting this forum, I think it is important to understand the internal limit for personal property used for business purposes, meaning there could be limited coverage for all of that shop equipment.

Damon Stathatos
09-21-2012, 12:31 PM
Here's the 'kicker' about shopping around and changing companies.

I had been insured by one company for years...and for years, my premiums kept going up and up. Finally I said to myself that I was going to shop around and change. So, found another company who, if they insured for a lesser replacement value, would lower my premium about 10%. Great, sign me up.

A couple of weeks later, some guy calls and says he needs to come out to inspect the house, new insurance company and all. Fine, come on out. About a month later, I got a list of 'corrections' to my home that were required for my policy to remain in effect. Did I say list? Make that pages. Not stuff like cap off the live electric wires dancing around your living room floor, stuff like replace missing (non functional, decorative) shutters on upper level (one window had set in tact, other window did not, looked fine though, almost planned). Things like install 'heat' detectors...but I already have hard-wired 'smoke' detectors, is there a difference? Then, no tree limbs can be hanging (not touching, hanging) over the roof line...care to explain why...hack that oak tree and wreck it for sure. Another one...'need wiring inspection'...what the heck does that mean, care to be a little more specific, did you see something that looked like a problem? Anyway, got together with the new agent, pared the list down (agent...'we' can do a little each year), and took my $350 savings in premiums, added another $2k, and made 'this year's' corrections. Looking back at it, I do remember going through something similar with my old insurance company, 20-25 years ago when I started with them, but we hadn't had an 'inspector' to our house for years, old-time customer and all.

So now I have a policy with lesser limits, a schedule over the next multiple years of things to fix, and have been kicking myself for not just paying the dang thing, like I'd done for years and years, and just 'eating' yet one more increase.

Greg Portland
09-21-2012, 1:37 PM
Then, no tree limbs can be hanging (not touching, hanging) over the roof line...care to explain why...hack that oak tree and wreck it for sure.
On a windy day the tree branch can rip the shingles off your roof. Also, having a branch over the roof could mean that the tree could fall onto/into the house if it comes down. Yes, your specific tree may not actually have these problems but the insurance company doesn't want to train a bunch of tree inspectors / arborists. Instead, they have a general policy of "no limbs over the roofline" to cover all the bases. I don't know why shutters would be a requirement in CA... in hurricane or tornado territory I could see the requirement (window protection).

Jim Koepke
09-21-2012, 2:31 PM
Our home and auto is with Garmers, go back one letter in the alphabet.

In 2008 a heavy snow wiped out our greenhouse and wood shed. It wasn't long before they sent a check to cover the rebuilding of them.

Our insurance rates have not gone up from that time. That was a surprise to us as we had expected an increase.

After 4 years we still haven't paid as much in as we have already gotten out.

Someone suggest paying extra for contents. This is a good idea that I will ask our agent for their opinion.

jtk

Ed Aumiller
09-21-2012, 6:57 PM
Recently had Farm Bureau tell us either to put all our insurance with them or our insurance on rental property would be canceled...
Started looking around.... found several companies that would insure our home and rental property at much less than current
rate on home & rental... went with Brethren Mutual for economic reasons...

We live in Virginia and never heard of the requirement to have xxx$ extra insurance...

Have decent woodshop and it is covered without extra charges provided it is only a hobby (which it is)....

Having replacement costs is not a bad idea as I could not replace my house on its value due to the
very low prices houses are going for now....

Larry Frank
09-21-2012, 8:44 PM
I switched my insurance to Auto Owners through an independent insurance agent. He asked a lot of questions and we discussed the options. I have the house insurance, a rider policy for electronics, and an umbrella liability policy. It was not cheat but very competitive. In this day and age, it is a good idea to check the liability coverage. You never know when someone will get hurt on your property and then sue you.

Beyond shopping around, it is very worth while to to check the ratings of the companies. I used the JD Powers rating to make certain that the company that I was going to get was reasonable.

Bill Cunningham
09-23-2012, 8:52 PM
A lot of the insured amount is to cover the inflated prices contractors will give the insurance companies to do the needed repairs. Back when I started my business 24 years ago, I was operating out of a garage that I insulated, wallboarded, put in a counter, lights etc.. The garage building package cost me 3k. and a another couple of K for the insulation/wallboard/lights/etc. When I out grew the garage and moved into a newly constructed 1200 sq.ft shop, I put the garage up for sale..finished inside, just haul it away, $1500.00.. A couple of buyers were interested, when the snowstorm hit.. The snowload was too much for the roof and it collapsed. Moving out of the garage, and into the new building put the garage back under my home insurance from the previous business insurance. Several 'contractors' supplied by the insurance company gave me replacement quotes of $25k-$30k..The one that came out after the collapse, put a 2x4 prop under one section of the roof, and left me with a 20x30' tarp. He billed the insurance company $650.00 for the 2x4 and the tarp.. I decided not to rebuild and would tear it down. The insurance company wrote me a cheque for $12,000.00 for the garage I was about to sell for $1500.00.. The other bit of luck, had the business still been in the garage, my business insurance would not have covered the loss of the building at all..

David Weaver
09-23-2012, 9:43 PM
I can't make too many comments regarding this (because I don't know the answer to your questions), but when I moved into my neighborhood, the neighbors had a house fire the monday after. I thought I'd moved into a neighborhood with arsonists or something!

Anyway, they had a lot of smoke damage and they took the house apart inside piece by piece without ever removing walls or windows. To tear it out and put everything in it back in replacement was well over the cost of the house on the open market.

The best way to find out if your rate is reasonable and if there are requirements is either to call the insurance commissioner's office or a competitor (a good one, not a scuzzy company). But if you think about taking bits out of the house and slowly restoring it piece by piece, it make sense that it would cost more to do that than it would cost to buy a "used" house or build a new one on a fresh lot.

Curt Fuller
09-23-2012, 10:05 PM
The thing about insurance, whether it's home, auto, medical, it doesn't matter, is that their business model is to bring in more money than they'll ever pay out. Sure, once in a while they get stuck paying a few claims but still they'll always bring in more than they pay out. So anytime a situation changes and they think there is a risk that your coverage might cost them more than the premiums you're paying, there will be a premium increase. On the other hand, about everyone I know buys insurance with the idea that if they ever need their coverage their insurer will be there to save the day (like in the commercials). That rarely happens without a fight. And even then the insurance companies are armed to the max with lawyers to protect their interest. After all you've been paying those lawyers salaries. And their intent is to pay you as little as they can get away with. Most of us would never enter into an agreement with those kinds of odds stacked against us. But because insurance is such a profitable business, they've been able to spend the money to lobby and influence legislation that requires you to purchase insurance. It's really kind of a crappy deal when you think about it. Just think of how much you've spent on insurance in your lifetime and weigh that against what you gotten back.

Mike Henderson
09-23-2012, 11:30 PM
...It's really kind of a crappy deal when you think about it. Just think of how much you've spent on insurance in your lifetime and weigh that against what you gotten back.
Insurance is one of those things that you hope and pray you never have to collect on. But if some disaster strikes, it's good to know you have insurance.

It's an example of how things work well in the aggregate that would be difficult if we all had to cover our own risks. So if I want to "self insure" my house, I'd have to save a big chunk of money - and when I'm starting out, I don't have twice my home value in savings - in fact, I probably don't have one time my home value in savings. But by joining up with a bunch of other people, I can pay a few dollars per year and have financial protection on my house. So what I'm "buying" each year with my insurance payments is "protection". It's not "wasted" money. I'm not making some kind of investment where I hope to have a claim so I can "make money" on my insurance.

In fact, if insurance wasn't such a good deal for both the individual and society, we wouldn't have it. Insurance developed a long time ago because people needed it, not because it was mandated.

Mike

Jack Lemley
09-24-2012, 7:00 AM
Insurance is one of those things that you hope and pray you never have to collect on. But if some disaster strikes, it's good to know you have insurance.

It's an example of how things work well in the aggregate that would be difficult if we all had to cover our own risks. So if I want to "self insure" my house, I'd have to save a big chunk of money - and when I'm starting our, I don't have twice my home value in savings - in fact, I probably don't have one time my home value in savings. But by joining up with a bunch of other people, I can pay a few dollars per year and have financial protection on my house. So what I'm "buying" each year with my insurance payments is "protection". It's not "wasted" money. I'm not making some kind of investment where I hope to have a claim so I can "make money" on my insurance.

In fact, if insurance wasn't such a good deal for both the individual and society, we wouldn't have it. Insurance developed a long time ago because people needed it, not because it was mandated.

Mike

+1 Mike

Curt,

When you pay insurance premiums for a year and that paid year comes and goes with no losses then you have gotten exactly what you paid for.... peace of mind that if you had had a covered loss you wouldn't have to bear the burden alone. So to say you pay insurance premiums for years and never get anything back is not entirely true. The insurance companies are required by law to maintain reserves for anticipated losses AND no they do not earn money on the reserves. Reserves are treated much like an escrow. This is way over simplified but hopefully you get the point.

Jack

Larry Frank
09-24-2012, 7:53 PM
I am a bit surprised at some of the comments about how insurance companies are out to pay you as little as possible. I do not think that this is true with all of the companies. One should also remember that the insurance companies are a business that is out to make money and there is a lot of competition.

Over the years that I have been a homeowner, I have had a couple of different claims one for wind damage, one for an electrical surges caused by a traffic accident. In both cases, the adjuster did not try to short me but found reputable people to make repairs. The insurance companies have lawyers but it is better for them to not have to get into litigation and bad press about their companies. Happy customers will also recommend them to others. Maybe, I have been lucky or maybe I have had good insurance companies.

Jim Becker
09-24-2012, 8:25 PM
Charlie, get quotes from other companies using an independent insurance agent. "Replacement cost" coverage is never calculated based on "market value" of the property, either. My carrier, Chubb, actually has a formal appraisal process to determine the real cost to rebuild a structure based on like-for-like materials and local labor factors. (specialized policy for unique properties...part of our home is 250 years old) Most carriers have a formula they use to do similar. Contents coverage is often some percentage of structural insured value, but you can adjust it upward if what you own requires that. (You also need to schedule certain types of personal property to insure they are covered for real value and replacement cost)

Some insurance companies play strange games. You don't need to sign on to that as a player. There are other teams that play more fairly.

Larry Whitlow
09-25-2012, 11:19 PM
The thing about insurance, whether it's home, auto, medical, it doesn't matter, is that their business model is to bring in more money than they'll ever pay out. Sure, once in a while they get stuck paying a few claims but still they'll always bring in more than they pay out. So anytime a situation changes and they think there is a risk that your coverage might cost them more than the premiums you're paying, there will be a premium increase. On the other hand, about everyone I know buys insurance with the idea that if they ever need their coverage their insurer will be there to save the day (like in the commercials). That rarely happens without a fight. And even then the insurance companies are armed to the max with lawyers to protect their interest. After all you've been paying those lawyers salaries. And their intent is to pay you as little as they can get away with. Most of us would never enter into an agreement with those kinds of odds stacked against us. But because insurance is such a profitable business, they've been able to spend the money to lobby and influence legislation that requires you to purchase insurance. It's really kind of a crappy deal when you think about it. Just think of how much you've spent on insurance in your lifetime and weigh that against what you gotten back.

I'm not sure I follow this. Of course the "business model" is to bring in more than they pay out. Isn't that kind of basic to any business. Additionally, I was not aware of legislation requiring insurance. Your lender may require you to provide coverage with them as an additional insured to protect the asset. Your DMV will require that you provide a minimum amount of financial responsibility if you own a car and the easiest way to do that is via auto insurance. Other than that, I was not aware of legislation that requires I obtain coverage.

Larry Edgerton
09-26-2012, 6:21 AM
Additionally, I was not aware of legislation requiring insurance. Other than that, I was not aware of legislation that requires I obtain coverage.

Forgot the new health care bill?

Larry

Charles Wiggins
09-26-2012, 11:03 AM
You ought to look into Farm Bureau. They insure residences as well as vehicles, and their claim service is amongst the best in the industry. Good rates too.

I second that. With Farm Bureau, your a member not just a customer. You could at least talk to some other companies and see what they offer and if the information your current agent is providing is accurate.

Zach Dillinger
09-26-2012, 11:33 AM
My day job is with the Office of Financial and Insurance Regulation in Michigan. I can't speak for Virginia, but we have no minimum requirement for homeowners here. This is a decision that is made by the insured and the insured's mortage company, and is subject to coinsurance through your carrier as Larry mentioned. Insurance rates (including increases) are based on risk factors and are approved by the Insurance Commissioner. Have you had frequent claims? A new trampoline? Dog? Need a roof? Trees overhanging the home? There are lots of perfectly legitimate reasons for increasing your rate. Shop around, you have nothing to lose. Increasing your rate only harms you if you let it... unless of course it is based on excessive claims, which will show up on your CLUE report and will cause every insurance company known to man to increase your premium.

As others have said, replacement cost has literally nothing to do with market value. Coverage C is usually 80% of Coverage A, so if you have a $225,000 replacement cost, you will have $180,000 in contents. This is standard form and most every company will have this without change.

A properly maintained home will get you the lowest rates. Put yourself in the place of the company. Would you want to insure a home that has a bad roof, missing railing, junk cars in the yard or big trees that could fall on the home? I sure wouldn't.

Andrew Joiner
09-26-2012, 10:49 PM
My day job is with the Office of Financial and Insurance Regulation in Michigan. Thanks Zach. I always recommend talking to your states Insurance Regulation department about insurance. It can sort out the facts from the sales hype . After all, the only other insurance experts to get information from are the paid agents of the insurance companies.


Yes, you'd think a properly maintained home would be cheaper to insure, maybe it is in Michigan. I've had many homes and rentals insured in 2 different states . In 36 years with 8 insurance companies, only once did someone from the insurance co. inspect the property. My guess is they just pool every house together regardless of condition. Yes, the more claims, the more your charged and unfortunately you can't shop around because of the CLUE report. However, I've never gotten a lower rate for my well maintained homes.

David Weaver
09-27-2012, 8:12 AM
The thing about insurance, whether it's home, auto, medical, it doesn't matter, is that their business model is to bring in more money than they'll ever pay out. Sure, once in a while they get stuck paying a few claims but still they'll always bring in more than they pay out. So anytime a situation changes and they think there is a risk that your coverage might cost them more than the premiums you're paying, there will be a premium increase. On the other hand, about everyone I know buys insurance with the idea that if they ever need their coverage their insurer will be there to save the day (like in the commercials). That rarely happens without a fight. And even then the insurance companies are armed to the max with lawyers to protect their interest. After all you've been paying those lawyers salaries. And their intent is to pay you as little as they can get away with. Most of us would never enter into an agreement with those kinds of odds stacked against us. But because insurance is such a profitable business, they've been able to spend the money to lobby and influence legislation that requires you to purchase insurance. It's really kind of a crappy deal when you think about it. Just think of how much you've spent on insurance in your lifetime and weigh that against what you gotten back.

This is a convenient argument to make, but it's picking bias at best.

The trouble is that if there was a whole lot of room to reduce rates from where they are (after administrative costs, reserve requirements, etc are accounted for), then another insurer would come around ( like a mutual who has no public shareholders ) and just buy all of the business in the state.

The only time you really get wanked by an insurer is if you fall in the wrong part of a rating group (i.e., you're at the top of your rate group and people with double the expected claims are at the bottom, you'll be subsidizing them). When you shop around, you're looking both for an insurance company that has relatively low overhead while still having a good customer rating, but also finding one where you fit in the right place in the ratings.

The insurance commissioner (reviewing rate filings by the insurers) and attorney general's office are in place to make sure that your rates are reasonable and you don't get stiffed on service.

Larry Whitlow
09-27-2012, 9:10 AM
Forgot the new health care bill?

Larry

Yep, I did. I was thinking more in terms of property/casualty coverage.