Home owner's insurance

[bkg]

Had a good conversation with my buddy Odie today - we had plenty of time in our 5 hour drive...

Anyway, one item we chatted about is home owner's insurance. Given all of the work that's happening to my house, it always seems to open up risk. Plus, we had tornados last week, so the season is upon us.

So learn me (ATTN DEBK!  ) on home owners. How many of you have extra "replacement value" policies? How many have full inventories? I have a 100 picture inventory stored in many locations, but have a LOT of updating to do, especially  with all of the work going on.

What are your best practices and best advice?

[rich_t]

I do have a full replacement value policy.

I do need to update my video inventory though (thanks for the reminder.)

[NHSparky]

I have a full value policy, as well as it covering any lodging I may need.  Also, I made sure wind damage is also in there as well, particularly after the damned hurricane or whatever the hell it was that blew through here in February.  If that tree had fallen the other way instead of over the road, that would NOT have been the time to find out I wasn't covered.

[debk]

In today's world.....and current housing market...it is vital to have replacement insurance!!!!

What many people don't realize, is though the "value" of a house may have gone down in a fair-market re-sale (what someone is willing to pay for the house)...THE COST TO REPLACE THE DWELLING HAS NOT! Or if it has, it is not nearly the same reduction hit as houses have taken in many markets.

Insurance companies are probably hoping that when people find out that the house they paid $350K for 2 years ago, is now worth $275K on the fair-market...they will reduce their insurance coverage.

Well, that's fine, provided nothing happens to the house. Cause if the house gets flattened by a tornado, the insurance is only going to pay what the insurance coverage is.

But a homeowner's going to be in a world of deep do-do, if it still costs $350K to replace. And mortgage companies want the house back in, at the very least, the same condition it was in when the mortgage was taken out.

Keep pics Brian, of all that you are doing, and soon as it's done, get your agent out there to look at it. I'm sure you are keeping all of your receipts too. In the meantime, make sure you have a replacement policy, not a cost one.

[Doc]

In today's world.....and current housing market...it is vital to have replacement insurance!!!!

What many people don't realize, is though the "value" of a house may have gone down in a fair-market re-sale (what someone is willing to pay for the house)...THE COST TO REPLACE THE DWELLING HAS NOT! Or if it has, it is not nearly the same reduction hit as houses have taken in many markets.

Insurance companies are probably hoping that when people find out that the house they paid $350K for 2 years ago, is now worth $275K on the fair-market...they will reduce their insurance coverage.

Well, that's fine, provided nothing happens to the house. Cause if the house gets flattened by a tornado, the insurance is only going to pay what the insurance coverage is.

But a homeowner's going to be in a world of deep do-do, if it still costs $350K to replace. And mortgage companies want the house back in, at the very least, the same condition it was in when the mortgage was taken out.

Keep pics Brian, of all that you are doing, and soon as it's done, get your agent out there to look at it. I'm sure you are keeping all of your receipts too. In the meantime, make sure you have a replacement policy, not a cost one.

Well....I think what you are overlooking is the fact that if your $350k house is now worth $275, and these conditions are actually close to a discussion that I had recently with my HO insurance agent......if it gets flattened by a tornado, I'll bulldoze the lot, sell it for the demolition costs, and buy an equivalent house for $275k.  Which is the amount of insurance that I would purchase.  If it's only worth $250k next year, that is what the policy gets written for......

I view homeowners insurance is pretty much legalized extortion.......I understand that the mortgage holder requires it to cover their investment, but I'll never insure ANYTHING for more than I  can actually replace it for on the open market at that point in time (not REBUILD.....we don't fall "in love" with our houses, finding another one in today's market is easy).......to do otherwise is a waste of money.

I have a similiar view of auto insurance......I buy a sureity bond for the minimum liability requirements, and self-insure for the balance.  With the premium savings that I've accumulated in an account for that purpose over the years, self-insurance becomes a no-brainer over the long haul.

There is a REASON that collectively, insurance companies hold a substantial percentage of the wealth in the US.

doc

[Zeus]

Although it wouldn't hurt,receipts aren't necessary if you have replacement value coverage. With replacement value coverage it does not matter what you purchased an item for it's what it would cost to replace that item. A couple other items overlooked  by many when purchasing insurance policies is personal liability coverage amts and indemnity riders.

[bkg]

I do have a full replacement value policy.

I do need to update my video inventory though (thanks for the reminder.)

brings up another interesting question...

I have probably 200 pics... but video or pics? Which is better?

[bkg]

Keep pics Brian, of all that you are doing, and soon as it's done, get your agent out there to look at it. I'm sure you are keeping all of your receipts too. In the meantime, make sure you have a replacement policy, not a cost one.

thanks, Deb.  That reminds me - I need to scan about 5 months of receipts. 

I'm having a review with my agent in a week or so. He suggested he'd come out to the house (always does) - I laughed... "dude... you don't want to do that just yet... "  He's a good guy, though not cheap on the cars anymore.

[debk]

brings up another interesting question...

I have probably 200 pics... but video or pics? Which is better?

Either works....put it on a thumb drive and in a safe deposit box...or somewhere very safe outside of the house....won't do you any good if it burns up in a fire or swept away in a storm..

[bkg]

Either works....put it on a thumb drive and in a safe deposit box...or somewhere very safe outside of the house....won't do you any good if it burns up in a fire or swept away in a storm..

I have stored in about 5 locations right now. One is often mobile. I love being creative with technology.

[Thor]

What I don't understand is that the insurance company also tends to include the value of the lot. I see no reason to insure a piece of land unless one lives in an earthquake or landslide zone.

[Doc]

What I don't understand is that the insurance company also tends to include the value of the lot. I see no reason to insure a piece of land unless one lives in an earthquake or landslide zone.

It's part of the scam to induce the stupid to overinsure, and pay premiums on coverage that they will never either need, or receive.......

I posted earlier in this thread about this........their best trick is to keep inflating the "cost to rebuild" numbers every year, when in this environment, the best financial remedy for a homeowner who loses their home, is to buy another one.....not rebuild.

Further, they will tell you that the "cost to rebuild" is going up, when you can see idled construction crews just begging for work at near cost just to keep their doors open........there has been no increase in basic costs of construction for at least four years, and likely not for another four.

Insurance companies are all about cash flow, and increasing premium income, and investment reserves.......they certainly do not have the homeowners best interests at heart.

When my HO insurance agent sents me one of those cheerful annual advance premium increase notices saying "Greetings.....your home is now worth $XXX,XXX, I return it with a nicely worded note saying....." Please place your check for this amount in escrow, and we can close in 30 days".......it works EVERY time.......

Doc

[bkg]

What I don't understand is that the insurance company also tends to include the value of the lot. I see no reason to insure a piece of land unless one lives in an earthquake or landslide zone.

Mine says "dwelling".... and is insured for much less than the value of the building + lot. I guess I thought that was normal. ????

[debk]

Mine says "dwelling".... and is insured for much less than the value of the building + lot. I guess I thought that was normal. ????

Might be different in different states.

Ours is just for the dwelling...

[Zeus]

Lot + dwelling coverage has to equal amount of outstanding mortgage. keep in mind that as long as there is outstanding finances against the property the coverage is to cover the outstanding financial encumberances not nec covering you against loss.


Also bear in mind mkt value is not replacement value. Just because the mkt is down doen't mean the price of supplies to rebuild goes down or that carpenters work any cheaper.