Dwelling coverage limit increase

1,698 Views | 19 Replies | Last: 6 yr ago by JAW3336
62strat
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AG
We bought a new home 4 years ago, and my ins. company set dwelling limits at about 95% of the price we paid. Now 4 years later, our home value has increased about 30%, and this last month, when our coverage renewed, they bumped the dwelling coverage by that much as well. It increased my premium by over $200 a year. Combined with higher escrow, my bill just went up $80 a month.

I am by no means an insurance guru, but after quick reading, dwelling is supposed to be rebuild cost of house.. so it shouldn't be affected by land value. When a home value increases quickly, it's typically the land/desirability that has gone up, right? It's not like 2x4s and labor have increased 30% in 4 years.

So should I be calling them and asking why it went up so much? No updates or other modifications have been done to the home.

Or am I missing something?
ag0207
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AG
Home owners insurance companies will screw you every chance they get. If they have to pay out a lot for disasters somewhere else you can bet your cost will increase. Mine went up almost $500 dollars from last year & I called about it. Basically was told that it was an increase because of claims paid last year. I got it lowered a little but not much
Vernada
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AG
You can call your agent and lower insured value amount.

I use to do it every year with State Farm.

Keeps your premium - and deductible - down.
rlb28
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AG
What your home is valued at by the appraisal district and what the replacement cost to rebuild have almost nothing to do with each other. Your insurance agent can take care of dropping the dwelling limit.
mm98
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This thread just made me look at my policy as it jumped up last renewal, and I'm not educated enough about the industry.

I bought my home for 210K. Appraisal is now close to 300K.

Here is my coverage:

Dwelling - 258K
Other Structures - 25K
Personal Property - 180K
Loss of Use - $77K

My novice opinion is I'm over-insured. Agree or disagree?
62strat
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AG
mm98 said:

This thread just made me look at my policy as it jumped up last renewal, and I'm not educated enough about the industry.

I bought my home for 210K. Appraisal is now close to 300K.

Here is my coverage:

Dwelling - 258K
Other Structures - 25K
Personal Property - 180K
Loss of Use - $77K

My novice opinion is I'm over-insured. Agree or disagree?

I did read that it's fine to have dwelling slightly over rebuild cost.. assuming that if a major disaster struck and totaled many homes in your area, it would definitely be a higher cost to rebuild because of the spike in demand of labor and materials.

Other structures: I realized I have 10% of dwelling, so it's over $50k.. yet all I have is a shed I built myself for $1k, and maybe 300lf of fencing, that's it, so I'll be lowering that too.

But mine went way up, almost $150k in a few years.. I'll be calling them soon.
rlb28
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AG
mm98 said:

This thread just made me look at my policy as it jumped up last renewal, and I'm not educated enough about the industry.

I bought my home for 210K. Appraisal is now close to 300K.

Here is my coverage:

Dwelling - 258K
Other Structures - 25K
Personal Property - 180K
Loss of Use - $77K

My novice opinion is I'm over-insured. Agree or disagree?

Disagree. You're good where you are. How old is your house? What area of the state do you live in?
mm98
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AG
Built in 2001. I live in Katy. Nothing fancy. Just a cookie cutter, but nice, area.
InMyOpinion
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Also keep in mind that the insurance would also need to cover cleanup if it is a major incident before the rebuild can even begin. Not sure how much that may amount to but just a thought.

every couple years I will go visit new homes and i will ask "what would it cost to build this house on a lot I already own?" I will get 3-4 numbers from builders and it typically gives me an idea if I have to completely rebuild. Not an exact science but gives me a ball park number.
rlb28
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AG
mm98 said:

Built in 2001. I live in Katy. Nothing fancy. Just a cookie cutter, but nice, area.
Premium is probably around $2,500 with 1% deductibles???
mm98
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AG
A little lower than that. I think around $2200.
rlb28
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AG
mm98 said:

A little lower than that. I think around $2200.
IMO, you are in good shape. Dropping your dwelling coverage about $30,000 or so would only result in about a $50 decrease to your yearly premium. Not worth it.
Aggiemike96
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AG
What I don't understand is the Personal Property coverage. In MM's case, his insurance company will cut him a $180k check in the event of a total loss?
03_Aggie
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Aggiemike96 said:

What I don't understand is the Personal Property coverage. In MM's case, his insurance company will cut him a $180k check in the event of a total loss?


Don't think so. They will reimburse for furniture, clothes and other personal property up to 180k. You would have to provide documentation/verification to get big chunks like 180k.
rlb28
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AG
03_Aggie said:

Aggiemike96 said:

What I don't understand is the Personal Property coverage. In MM's case, his insurance company will cut him a $180k check in the event of a total loss?


Don't think so. They will reimburse for furniture, clothes and other personal property up to 180k. You would have to provide documentation/verification to get big chunks like 180k.
Correct, but it adds up quickly. Obvouisly the big stuff, but socks, toothpaste, pots, pans, etc... throughout the whole house, garage, attic.
mm98
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The phraseology used when I signed up was "possessions and content".

I've wondered if that is too high, but also was too lazy to investigate as I assumed property and rebuild were the majority of my premiums anyway.
JAW3336
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AG
ag0207 said:

Basically was told that it was an increase because of claims paid last year.
you realize this is the way insurance works right?
JAW3336
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mm98 said:

The phraseology used when I signed up was "possessions and content".

I've wondered if that is too high, but also was too lazy to investigate as I assumed property and rebuild were the majority of my premiums anyway.
It would shock you what it would cost to replace every single item in your home/garage.
The Fife
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Has anyone had the insurance company come by after doing some major renovations? I've rebuilt a significant part of our house and have a feeling the cost to replace it would be just a bit higher now.
03_Aggie
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The Fife said:

Has anyone had the insurance company come by after doing some major renovations? I've rebuilt a significant part of our house and have a feeling the cost to replace it would be just a bit higher now.


Don't think they'd need to come out and verify? Can't you just call to up your coverage and they'd adjust premium accordingly?

ETA: I guess they would send someone to verify the house is still insurable and someone isn't trying to up their limit and then file a claim.
JAW3336
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03_Aggie said:

The Fife said:

Has anyone had the insurance company come by after doing some major renovations? I've rebuilt a significant part of our house and have a feeling the cost to replace it would be just a bit higher now.


Don't think they'd need to come out and verify? Can't you just call to up your coverage and they'd adjust premium accordingly?
Most companies will adjust with a phone call. Some will do a reinspection.
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