Home Insurance Coverage - How Much? (Houston: homeowners insurance, home builder, purchase)

[trele6]

I am having a new house built and the purchase price is right at $300k, my home insurance guy is quoting me coverage at $427,000.. Is this excessive?

[HoustonRonnie]

That's 42% over cost. I think 30-35% for replacement on a total loss is more reasonable. If you really want to nail it down:

To determine your amount of homeowners insurance coverage:

1. Get an estimate of the replacement cost of your home from a qualified appraiser.
2. Select the coverage amount that best fits your needs.

Purchase an amount of coverage at least equal to the estimated replacement cost. But the choice is yours. Determining your home’s estimated replacement cost is important because this will ultimately determine which policy options are available to you. Since it is impossible to predict today what the exact cost will be to replace your home in the future, it’s important to have enough coverage to account for unforeseen circumstances.

[wheretogo]

That $300K includes the value of the land also..which should remain intact (volcanoes and that kind of stuff may be a concern ). If the land is worth, say, 90K, the house itself is worth only 210K. Even if you add 1/3rd of that as the replacement cost, 300K should be a decent coverage.
Most insurance companies do not want to consider it that way, I beleive.

Originally Posted by trele6

I am having a new house built and the purchase price is right at $300k, my home insurance guy is quoting me coverage at $427,000.. Is this excessive?

[chris_ut]

If you had to rebuild your house you would pay custom home builder prices do it will be more but that does seem high.

[bronstew]

That seems high. Our house was valued at $407K, we're insured for about $350K. That's with USAA.

[kreeyax]

Originally Posted by chris_ut

If you had to rebuild your house you would pay custom home builder prices do it will be more but that does seem high.

Yep. You'd also pay for demolition of the remains of the old house and possibly the foundation. And then there's the cleanup and removal of all the debris. It can get pretty expensive to tear down and rebuild.

[HoustonRonnie]

Originally Posted by bronstew

That seems high. Our house was valued at $407K, we're insured for about $350K. That's with USAA.

You're including the land in the value. That's apples/oranges for replacement cost.

Ronnie

[marksmu]

Originally Posted by HoustonRonnie

You're including the land in the value. That's apples/oranges for replacement cost.

Ronnie

Hard to tell, but I think the OP is also including the land...he may not be aware that he does not need to include the land in his price.

Safeco has a policy where you insure your house to $XYZ and get a set premium calculated by that value but if the actual cost come back above the value they allow upto 25% more than XYZ.

[trele6]

My original post did include the land value, approx $50k, never thought of removing that before, just never dawned on me.

[crone]

Don't forget living cost while your house is in turmoil.

As I've said before FWIW, land does go away. A hurricane got one lot and a mudslide got another. Not so much to be concerned about in NW Harris county, thank goodness. How often do pipelines rupture? They are all over this place.