| Author |
Message |
    
Phil
Supporter
Username: Barleyrooty
Post Number: 1005
Registered: 5-2001
| | Posted on Thursday, February 16, 2006 - 12:58 pm: | 
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Just received the happy news that my home insurer wants to double my premium because they claim that the cost of rebuilding my home is 20% more than the value of the home. I need to make the case that this isn't true.
So can someone who knows, please tell me the approximate cost of building a new house in Maplewood per square foot? |
Bob K
Supporter
Username: Bobk
Post Number: 10705
Registered: 5-2001
| | Posted on Thursday, February 16, 2006 - 1:07 pm: |
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First off a 20% increase in coverage shouldn't double the cost of the insurance. There has to be more than that to the new quote. With older homes it isn't at all unusual for the replacement cost to be more than the market value. Those ribbon floors, plaster walls, oak or chestnut trim are expensive to replace in this day and age.
I think standard construction (sheetrock, carpeted floors, minimal trim, hollow core doors, etc.) runs around $200 a square foot, excluding the foundation. At least that is what my insurance agent told me. 
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Miss L Toe
Citizen
Username: Miss_l_toe
Post Number: 463
Registered: 10-2003
| | Posted on Thursday, February 16, 2006 - 1:08 pm: |
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Wow! Is it Chubb?
Actually we've just received a letter from Geico whom are now selling home insurance..might be worth getting a quote from them. |
extuscan
Citizen
Username: Extuscan
Post Number: 607
Registered: 6-2001
| | Posted on Thursday, February 16, 2006 - 2:16 pm: |
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Chubb... There was a year a few years ago where only one insurance company paided out less in claims than the total of thier premiums. Most insurance companies pay out 101-102-105% of of premiums in claims, with the difference made up by the investment of the premiums. Only Chubb paid out less. One year... years ago... something like that. TIGHTWADS.
-John |
Phil
Supporter
Username: Barleyrooty
Post Number: 1006
Registered: 5-2001
| | Posted on Thursday, February 16, 2006 - 9:21 pm: |
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20% excess, not increase. I guess the way I see it is this. Assume I take the insurance they want me to. Then, if my house is flattened by a giant iguana, I have a choice:
1. Rebuild the house for $600,000, and then own a $500,000 house.
OR
2. Collect the $600,000. Sell the land for $100,000, and buy a $700,000 house.
I can understand that the cost of all the characterful old features would be higher, but no-one in their right mind would do it that way - so why insure for it? Just seems like an insurance company scam to me. Or am I missing something?
Thanks,
Phil
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jab
Citizen
Username: Jab
Post Number: 525
Registered: 3-2003
| | Posted on Thursday, February 16, 2006 - 10:24 pm: |
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Phil, we had this argument when we first moved to town (and you know our house). Chubb came to visit a week or so after we closed and doubled our premium. We ended up switching to another insurer, because there was no reasoning with Chubb. We made a similar argument: why spend 2x to build a house that one day later is worth 1x. |
Bob K
Supporter
Username: Bobk
Post Number: 10713
Registered: 5-2001
| | Posted on Friday, February 17, 2006 - 4:39 am: |
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Most policies only provide "full replacement cost coverage" if you rebuild. Otherwise you get actual cash value.
It really isn't a scam. The rates are based on people carrying limits equal to the replacement cost. There is also a "coinsurance clause" in many if not most policies that limits settlements to the percentage of the limit you carry to what you should have carried if you don't carry at least eighty percent of replacement cost.
Chubb is a great company. Their claim service is usually among the best. However, they aren't cheap.
When I started in the business houses where the replacement cost was more than the market value were called "white elephants" and many insurers didn't want to insure them. |
Phil
Supporter
Username: Barleyrooty
Post Number: 1008
Registered: 5-2001
| | Posted on Friday, February 17, 2006 - 9:32 am: |
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Hmmm. Still sounds like I'm overpaying the insurer for the benefit of a contractor.
I haven't really lost $600,000 (The value of my assets go from $500,000 to $100,000), nor am I $600,000 better off after I rebuild. So why should I insure for $600,000?
If the insurers don't want to do this and I don't want to do it, why not just find a policy that covers the loss of value, or the cost of replacing to a similar market value? (I'm sure a nice, new house would sell just as easily - maybe even more so.)
Plus they totally misestimated the size of my house! (But I can fix that one).
So assuming I can't do better, what's a reasonble per foot rebuilding cost for a 100 year old house?
And how much is a 150x70 lot of land worth (btw Ridgewood Rd and Wyoming)?
Thanks,
Phil
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Bob K
Supporter
Username: Bobk
Post Number: 10722
Registered: 5-2001
| | Posted on Friday, February 17, 2006 - 10:21 am: |
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Phil, every homeowners insurance company has a building cost estimator available to their agents. Contact your agent and go over this carefully, especially if the square footage is wrong on the company estimate.
Also, while it happens, houses rarely burn to the ground, especially in a town with a good fire department. The most likely scenario is that you are going to be repairing ten or twenty percent of your house. This is why insurers push insurance to full value. People tend to buy less than total replacement cost for this reason. |
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