Homeowners Insurance

[gjl]

I just got the renewal in the mail for my Homeowners Insurance. The house has been paid off for over 10 years now so I pay it directly, not included in a mortgage payment. It went up again which was not unexpected but the increases year to year are getting ridiculous. The house valuation increases year to year I think are unrealistic vs what I think the house is worth. And I understand replacement cost is what drives the valuations but is it really that much higher than what a house could realistically sell for. Last year I talked to the Ins Co and they said they could not reduce the valuation on a replacement cost policy. Here are the last 3 year valuations and premiums I'm dealing with. How are others dealing with this issue?

2022 - Valuation $385713 - Premium $2957.
2023 - Valuation $424284 - Premium $4030
2024 - Valuation $458227 - Premium $4869

[April in the Plaza]

If the house is paid off, I don’t really see why they (or anyone else, really) should care about where you set the dwelling coverage. There are absolutely insurers in this market who will let you under-insure relative to what they think replacement cost would be.

And I could be wrong here, but i could see a lot of people—when facing a total loss—simply taking the value of the policy limits and purchasing an existing home somewhere else. Then they could clear the lot and sell it. I know I probably wouldn’t want to live in a hotel or a rental for 12 months during re-construction.

[Bill Robertson]

One thing I have always done is shopping every couple years. Even sticking with the top, well known carriers I can get them to complete and get better rates from a new carrier than my current carrier.

[gjl]

If the house is paid off, I don’t really see why they (or anyone else, really) should care about where you set the dwelling coverage. There are absolutely insurers in this market who will let you under-insure relative to what they think replacement cost would be.

And I could be wrong here, but i could see a lot of people—when facing a total loss—simply taking the value of the policy limits and purchasing an existing home somewhere else. Then they could clear the lot and sell it. I know I probably wouldn’t want to live in a hotel or a rental for 12 months during re-construction.

That is called an Actual Cash Value policy. The problem is most of the major insurance companies won't write ACV policies and you are forced to go with a company that you've probably never heard of. All the majors seem to write only Replacement Cost policies. I'm with AAA and they won't write ACV. When I was with Liberty Mutual they would let you insure for 10% less than their system figured your replacement cost value was but their rates were so high I had to switch to someone else. And I've always thought too about the land value. For example my house is on a 1 acre property in Warr Acres. Even if the house was leveled to the ground this 1 acre property where it is located has a lot of value. And if I were to put the house up for sale I don't think I could get anywhere close to the $458277 I have to insure it for.

[jompster]

I've had my insurer (or broker since I switched to a brokerage) modify those replacement valuations almost every year and they were happy to do so within reason. It doesn't hurt to ask. Starting with the 56.7% increase I faced with Farmers a few years ago I strictly work through a brokerage now and set guidelines with them of a "no increase over 13%" standard. It usually results in a Teams meeting to go over four or five different options, and sometimes it still goes over that threshold. I think my largest increase this year I accepted at 21.2% on my personal homeowners policy. Oddly enough the landlord policies only increased about 7%.

Maybe you would be better off working with a broker who can shop out options for you, and they usually can tweak things like rebuild, coverage on other structures, and deductible to get you at a better price, and then send it out to carriers to see if any of them will make a bid for your business.