house insurance online - bait & switch?

 

  I got our house insurance renewal statement in the mail a few days ago,
and noticed that the cost had gone up from about $385 to $620.  Now I'm fine
with them raising the price $10 or $20 year after year, but I won't stay
with a company if they do this sort of thing.  We haven't made any claims,
nor has anything physically changed about the house or anything.

  I got on homeinsurance.com, put in details of what I wanted, and was
encouraged to see that up came an estimate of $390 a year for slightly
better coverage than what I had last year.  However, when I called them this
morning and went through everything again, they started quoting much, much
higher numbers - about $740 a year.

  Evidently this is because they are using what they consider the
replacement cost to come up with how much insurance I need on this place.
According to them, it would cost about $230,000 to replace this house.  I
argued that it would only cost me about $85k to do the same.

We bought this place for about $45k 6 years ago, and I've put about $20k
worth of repair time and hardware into it.  If you look at home sales in our
neighborhood, similar homes in the area have sold for about $85k over the
past 2 years.  (double/duplex, 6 bedroom, 2 bathroom, 2,600 square feet)
So, as far as I'm concerned, this property could easily be replaced simply
by purchasing a new, similar property down the street.

  Here is what we got last year for our $385:

$1k deductible on everything
$92k dwelling protection
$9,200 other structures protection (a shed)
$64,400 personal property
up to 12 months living expenses
$100k family liability
$2.5k guest medical, each person

  Pretty basic, right?  But it met my needs.

  I told the lady on the telephone that their system had let me enter
information that closely mirrored my current coverage, and asked why they
would let people enter amounts that they will then not allow.  She just kept
repeating some sort of song and dance about their "partners" only covering
the replacement amount.  Then I explained that the replacement cost for this
property was how much I would have to pay for a similar property in the
area, and the whole thing became a circular argument from which the only
escape seemed to be me saying "Well, I guess that means that we've wasted
our time here, doesn't it?"

  I'm just not increased in greater coverage - what I want is the lowest
bottom line price that meets my needs.  I want to know that if this place
burns down, I will get $90k to $100k that I can use to buy another duplex in
the area that we can still use to fund our IRA's.

  So, can anyone recommend a company that doesn't play this game, and can
actually give me something close to the numbers that are showing on my
current insurance statement?  I would be glad to send them a copy of my
current insurance, outlining the coverage that I want.

 



OK, you've got to consider, the contents of the house can cost as much, or
more, than the house itself, if your house is relatively inexpensive (as
yours is).  So your replacement coverage has to figure that in.  Apparently
somewhere along the line, someone did the math.  It looks like you've got
about $74K in other assets that need to be protected.  So you need about
$160K on "replacement" cost coverage, assuming that similar homes in the
area are $85K.  You also need to consider appreciation.  If costs are going
up in your area, you might need to increase your coverage 50% or more, just
to cover the next few years.  Based on THAT, $230K replacement coverage
seems a tad high still, but not too terrible.  Consider if your house
increases in value 50% over the next few years (unlikely, though it has
happened in the past), your replacement value could easily top $200K.

Having said that, it is unlikely that you won't be able to find someone to
cover your home at the level you need (roughly $200K, including dwelling,
other structures and personal property) at a price you are willing to live
with.  Keep shopping around.  -Dave

 


  Actually, the agent wouldn't budge on that one.  Almost everything we have
came from yard sales and thrift stores.  Everything in our place that isn't
nailed down is worth at most $8k, total.

 



At yard sale prices.  Assuming the worst, like a fire that destroys
everything, you won't have time to replace everything at yard sales and
thrift shops.  You will probably buy at least half of your stuff brand new,
and the price will make your jaw drop.  And I doubt if you've added up the
contents of the rental unit.  Tenants might (and really should) have
homeowner's insurance also.  But even if they do, the claim will
(eventually) be paid under your own homeowner's insurance policy.  That is,
tenant files claim, insurance company for tenant pays claim, then your
insurance company reimburses the other insurance company.  So...you need to
insure the contents of the other side of the duplex, also.  I'd say under
your old policy, you were probably a bit under-insured, as far as personal
assets goes.  I don't blame the agent for not letting you go lower on that.
Note I'm not an insurance agent.  But you've got to cover your ass,
especially if you are renting part of your house.  -Dave

 

Dave wrote


everything, you won't have time to replace

half of your stuff brand new,

Thats completely silly. No reason why you cant buy the
absolute essentials at thrift shops and then replace the rest
from yard sales and thrift shops as what you prefer turns up.


Nope, not when you dont bother with any of those.


Thats the renter's problem, not the landlords.


Thats their problem, not his.


homeowner's insurance policy.

Wrong, as always.


your insurance company reimburses the other

the duplex, also.

No he doesnt.


as personal assets goes.

His choice. The most that would mean is that he would need
to put more effort into replacing it if it did burn to the ground.


More fool you.


Thats obvious.


house.

Wrong, as always.