Another homeowner's insurance question (lenders, house, purchase)

[pbnj07]

I know 1% is a common deductible, but does everyone have coverage set around the purchase price or current value of their house or more?

[atxcio]

Originally Posted by pbnj07

I know 1% is a common deductible, but does everyone have coverage set around the purchase price or current value of their house or more?

I use replacement cost, which they estimate based from a formula. If you bought it a while ago, purchase price is not useful anyway... so you have to consider replacement cost only. If it's newer, the lenders sometimes try to require you to get insurance for purchase price.. but I think they can't legally make you do that. If the insurance company says replacement cost is lower than purchase price, I believe you can insure it for lower amount. Makes sense, especially since the purchase price includes the lot, which you'll still have even if the house is destroyed.

Although, now that I think about it... does anyone use their own estimate for replacement cost? If I figure $150 per sq ft for new construction, the number I get is significantly higher than what the insurance company says "replacement cost" is.

[centralaustinite]

I use $110 per sq feet as replace cost, since a tornado or fire would most likely leave my pier and beam foundation intact (drilled piers, 20 feet, concrete and steel construction) and we would build on that, you don't have to replace the land either and that is a factor in the price of a home but not rebuildling.

[pbnj07]

So it's not just me....most people do insure for replacment cost rather than current value?

The reason I was asking is that I may need a new roof and my deductible is 1% of the $600K+ coverage I have, even though the purchase price was just under $400K.

Does anyone purchase separate insurance just for roofs? I'm happy with my coverage in the event of catastrophic loss, but I'm not too comfortable with worrying about paying over $6K for a roof every time it hails.

[ATX Homeboy]

6,000 for a roof on a house worth 400K is pretty standard. Just my guess but probably a large house meaning a large roof. Most of the cost of course is labor and then depends upon materials ie. Clay Tile, Shingle, or Metal. Then factor in gables, pitch of the roof, rain gutter (in some cases may need to be removed then put back), plywood (if damaged).

But, do get several estimates before deciding on a contractor. Of course, insurance will have to approve and many times have their own contractors they work with especially if it is part of any home shield warranty.

Best of luck.