Homeowners Insurance experts - is this right??

[Anjelica]

We have had AAA for years now - actual decades if you count the time my husband has had them for his car insurance. We've had homeowners insurance since we bought it back in 2001 - 0 claims to date. Last year we got a notice that stated our premium was increasing from $771.xx to over $1200.xx but to help lessen the impact they were only going to increase the policy year of 2009-2010 to a total of $900.xx and then it would go to the new price of $1200.xx for the 2010-2011 policy year.

When I called them to complain I was told there was nothing they could do about the price increase as "that is what the computer spits out". Apparently they went to a new software system that determines the replacement cost to build out house. Now mind you this replacement cost is about $140,000 MORE than the appraised value of our house. I know that appraised value and replacement cost can differentiate, I would even think by $20,000-$40,000 but $140,000???

I started to shop around the rates keeping in mind the old addage you get what you paid for. After reading J.D. power and associates homeowner insurance reviews I decide to call up Amica and check with them on their rates (rated #1 for customer satisfaction). After talking to them for awhile the gentleman on the phone informed me that they also use a computer software program that "spits out" the replacement value. And according to their replacement value it's $252,000 difference. Their premium on my house was/is going to be $2117.xx for a single policy year.

I don't understand how the replacement value these "software programs spit out" are so different in what I know for a fact I can rebuild my house for. Are all homeowner insurance companies going that route?

Again, I don't mind paying for a good quality homeowners insurance company that when the time comes, if ever, I need to make a claim I am going to be 100% happy. I just don't know if I am going to have to pay extremely high premiums...

 

[DVC-Don]

We used a company called ExcactValue to calculate replacement cost. We fed in the square footage, type construction, features & location to get the replacement cost. To do this we had to personally inspect the home to get photos and measurements from the outside and do a phone interview for the interior features. The only time we had to go inside was if there was a wood stove or the electrical was prior to 1960.

 

[here757]

when i worked for USAA we used a company's software ... it was by marshal swift and taylor...
same concept...
year built. where house is. square footage. and the "norm" for your area. notice most houses built on a street have similar features
we asked questions about flooring, etc etc
it calculates replacement costs.
this is actually important to you. the way MOST policies read... u have to insure the house for up to 80 % of the rebuild cost. if you are under you claim will not be paid in full..
for example.
house worth ... 150,000 this counts land and so forth
rebuild cost. 100,000
you insure for 60,000 ... which is 60 percent..
your claim would be paid for 60 percent of the 60,000 if there is a total loss..

so at that point you either have to figure out what part of the house you dont want to rebuild.. or come out of pocket for the difference.

but i would ask the rep to go over the details they have on yur house. the softwear is not perfect. sometimes it will say the house has a basement but really it doesnt. and there is no way for the rep to know that.

but to ask your question.. yes all insurance companies will be going to this. i thought they all had already

ETA.. the apparaised value has nothing to do with insurance. they dont even look into that.
appraraised value is usually done by the city or county for tax purposes.

 

[msmayor]

I don't understand how the replacement value these "software programs spit out" are so different in what I know for a fact I can rebuild my house for.

What facts are you basing it on? Have you priced it out yourself?

You simply cannot go by the appraised value. Your house is not "new", and its appraised value is based on the age of your home and extras.

To build it new isn't as simple or cost effective as a builder completing a development...who has access to volume discounts because he's purchasing 50 sets of kitchen cabinets, or 50,000sf of carpeting. You're paying close to full freight for everything that needs replacing, and you'd be quite surprised at how much MORE than appraised value that can be.

My "rebuild" cost is around $220,000 more than the assessed value.

 

[Anjelica]

What facts are you basing it on? Have you priced it out yourself?

You simply cannot go by the appraised value. Your house is not "new", and its appraised value is based on the age of your home and extras.

To build it new isn't as simple or cost effective as a builder completing a development...who has access to volume discounts because he's purchasing 50 sets of kitchen cabinets, or 50,000sf of carpeting. You're paying close to full freight for everything that needs replacing, and you'd be quite surprised at how much MORE than appraised value that can be.

My "rebuild" cost is around $220,000 more than the assessed value.

I completely understand that the appraised value cannot be use in the replacement value.

I have a good friend who just finished building their house from 'scratch'. They did not go into a development or use a factory type builder. They piece mealed out the entire construction (was their own land). Their house is less than 6 months old and has obviously newer building materials than what was available 9 years ago when our house was built. They have 420 more square feet than our house and several upgrades. Their total house construction costs were tens of thousands of dollars less than our replacement value.

Our friends live a little over 6 miles from our house in the same county, town, school district, etc.

Like I said earlier - I completely understand replacement value vs. appraised value. But I had not heard/read about the extremely wide gap between those numbers hence my question to those with more indepth knowledge about the direction insurance companies are going with "output from the computer".

 

[wmharley]

when i worked for USAA we used a company's software ... it was by marshal swift and taylor...

my wife worked for them....

We had to fill out a long survey on our house.. size, materials, construction etc....

I'm sure it will go up, but hopefully not too much.

 

[here757]

I completely understand that the appraised value cannot be use in the replacement value.

I have a good friend who just finished building their house from 'scratch'. They did not go into a development or use a factory type builder. They piece mealed out the entire construction (was their own land). Their house is less than 6 months old and has obviously newer building materials than what was available 9 years ago when our house was built. They have 420 more square feet than our house and several upgrades. Their total house construction costs were tens of thousands of dollars less than our replacement value.

Our friends live a little over 6 miles from our house in the same county, town, school district, etc.

Like I said earlier - I completely understand replacement value vs. appraised value. But I had not heard/read about the extremely wide gap between those numbers hence my question to those with more indepth knowledge about the direction insurance companies are going with "output from the computer".

still cant compare ur friends to yours..
your friend might have had a builder who was doing several houses in the same year and got the materials at a discounted rate due to volume.

if you insurance company has to rebuild they cant rely on the discount rates.
if that builder doesnt have any of the materials needed and has to order them. might not recieve discount.
or if they use a different builder who doesnt have the buying power.

the insurance company will not hire the homeowner to rebuild.
also .. some of the newer materials cost less to replace.
ie.. dry wall is cheaper then plaster.
plaster isnt used anymore so its more expensive to have replaced.
and its not really an option . if you have plaster. ur contract says they have to replace. not upgrade. so your insurance company is gonna try to use plaster if they can
the insurance company is not out to get you. they are looking to protect you.

 

[here757]

my wife worked for them....

We had to fill out a long survey on our house.. size, materials, construction etc....

I'm sure it will go up, but hopefully not too much.

u know you can do that online...

yea from time to time we have to fill them out on our house.
its cuz most people dont call the insurance co and say .. i added a second level to my house. or i replaced my carpet with imported italian tile LOL

mine went down like 20 dollars. i went from carpet to limilate ( i cant spell it) lol flooring. looks like hard wood but its not.

 

[TxRabbit]

This EXACT same thing happened to us!

We weren't given any stair stepping in the rate though. It just almost DOUBLED in one year, which I thought was ridiculous. Seriously?

When I called to complain, they explained the same thing. The computer generated the cost. Ok fine.

That was Nationwide. I found that Liberty Mutual's computer spit out a cost similar to what it had been before and we switched. Shop around.

 

[Anjelica]

This EXACT same thing happened to us!

We weren't given any stair stepping in the rate though. It just almost DOUBLED in one year, which I thought was ridiculous. Seriously?

When I called to complain, they explained the same thing. The computer generated the cost. Ok fine.

That was Nationwide. I found that Liberty Mutual's computer spit out a cost similar to what it had been before and we switched. Shop around.

Have you been happy with Liberty Mutual since you switched?

 

[TxRabbit]

Have you been happy with Liberty Mutual since you switched?

I have been. We actually had to deal with a claim just after Thanksgiving. The dishwasher valve busted and leaked. Caused damage to the sink base cabinet in the kitchen and the support structure of many other cabinets. Lots of drywall and base boards. And worse of all, the wood floor in the formal dining room.

They got DH, DS, me, and two cats moved into a kitchenette type 2 bedroom hotel. Brought in the guys to dry out the house and prevent mold. The claims adjuster was awesome. He worked it out that the assessed damage would give us a small check at the time that he made the assessment. He wrote us the check (he made sure it went above the deductible) before he left. And then the insurance paid the "dry it out/prevent mold" team directly and also paid the repair the kitchen cabinets (a specialty business, I can't remember the name) directly.

The fact is that they would probably have replaced all the base cabinets and done a bunch of other work, but the problem was that I had just replaced the countertop and put in a new backsplash (with discontinued tile that matched the floor) and really wanted these preserved. They totally worked with me. Great service. Totally happy.

Just renewed the policy also and it went up a nice reasonable $60? Even after the claim.