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Old 04-08-2010, 05:46 PM
 
13 posts, read 37,610 times
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I've been getting homeowner's quotes and the replacement cost each has provided is all over the map. The range so far is anywhere from 231K (ASI Lloyds) to $321k (USAA).

This particular house is a 2 story in League City and is approx 3000 sq ft, built in 2000. There is nothing fancy about the house that would jack up the replacement cost.

Anyone have a a good schwag as to approx cost/sq to build a house from scratch. I want to be sure I have enough coverage but don't want too much, obviously. Thanks!
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Old 04-08-2010, 08:01 PM
 
Location: Houston area
1,408 posts, read 3,563,022 times
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Replacement cost is another way the insurance company makes more money. You can ask for a reduction, but i'm not sure what the guidelines are in how much they can lower it.
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Old 04-08-2010, 08:13 PM
 
Location: Spring, TX
460 posts, read 2,174,423 times
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You can't compare "production builder" cost per sq ft with what it would take to rebuild your house, the only one in the neighborhood, if it burned down. Without plans, you would essentially be starting from a blank sheet of paper. That means in addition to the materials cost, you have architectural costs, general contractor costs, etc, without the benefits of volume building in the area. Your best comparison would be to call a custom builder and get a price per sq ft for your size house in your area. It will be a lot more than you think. Certainly was when I considered knocking my house down and rebuilding in place rather than moving. While a fire wouldn't necessarily require the foundation to be replaced (which makes up the biggest single component cost of a house), a total fire loss might almost mean it's easier to take up the foundation and start over, rather than trying to recreate what you had before (without plans or drawings). That further drives up the cost. Net net, your worst case is to find you're under insured when you can least afford it.
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Old 04-08-2010, 09:54 PM
 
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Good point tdhg. Interesting approach on considering knocking down your own house though hehe
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Old 04-09-2010, 05:42 AM
 
733 posts, read 1,848,518 times
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I have used the tax assesed value of my home to determine replacement cost. Is this incorrect?
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Old 04-09-2010, 06:00 AM
 
Location: Spring, TX
460 posts, read 2,174,423 times
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The tax value is (theoretically) the market value, not the rebuild value/cost for insurance purposes.
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Old 04-09-2010, 08:15 AM
 
Location: Pearland, TX
3,333 posts, read 8,012,857 times
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Quote:
Originally Posted by dudemize View Post
I've been getting homeowner's quotes and the replacement cost each has provided is all over the map. The range so far is anywhere from 231K (ASI Lloyds) to $321k (USAA).

This particular house is a 2 story in League City and is approx 3000 sq ft, built in 2000. There is nothing fancy about the house that would jack up the replacement cost.

Anyone have a a good schwag as to approx cost/sq to build a house from scratch. I want to be sure I have enough coverage but don't want too much, obviously. Thanks!
They can lower it. I've done this twice just by suggesting that they net the land out of the appraised value. If they won't do that, find another underwriter.

Just sayin'...

Ronnie
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Old 04-09-2010, 09:06 AM
 
Location: Pearland
799 posts, read 2,097,485 times
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There is some room, but they usually have minimums per sq ft. This is just another way to manipulate deductibles. They overvalue your house, then you have a 25%(or whatever percentage) higher deductible. People file non-total loss claims all the time. Total loss pretty rarely, big fires are about all I can think of. So they save huge amounts on virtually every claim, but have to pay more in a one in a million scenario.

Just another scam they sell you as protection.

I have a rent house I paid 85k for, I cant find anyone to cover less than 160k on the dwelling.
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Old 04-09-2010, 10:04 AM
 
Location: Katy Texas
4 posts, read 7,229 times
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Make sure your home is covered for all it’s worth.
A home is the largest investment most people make in their lifetime.
Recent industry figures indicate about two out of every three homes in America are underinsured.
The average underinsurance amount is about 22 percent, though some homes are underinsured by 60 percent or more.
This means millions of American homeowners are at risk of major financial loss should a disaster ever affect their home.
Homeowners in these unfortunate situations find themselves responsible for tens of thousands of dollars of unexpected out-of-pocket costs to rebuild their house.
Many of these homeowners are financially unable to rebuild a house like the one they had prior to their loss.

What is reconstruction cost?
Reconstruction cost is what it would cost to rebuild your house from the foundation up with materials of similar kind and quality.
Is reconstruction cost the same thing as market value?
No.
Reconstruction costs for your home may differ considerably from market value, particularly for older homes.
Market value is what a willing buyer would pay for your home, including the lot. Location is a major factor in determining market value.
Homeowners should also not assume that coverage matching their mortgage balance is sufficient to rebuild their home.
The amount of insurance you buy should be based on rebuilding costs, not the selling or purchase price of your house.

How do we decide how much coverage a client needs?
Most insurance companies use a program designed to calculate reconstruction costs in their quoting process, taking into consideration :year of construction, square footage, bedrooms, bathrooms, attached/de-tached garage, porches/patios, and so on.
You always want to insure your home for the amount it would cost you as a consumer to rebuild your home IF you were to suffer a total loss.
NEVER insure for the amount paid, or appraised value.
EVEN a brand new home should not be insured for the amount you paid for it as the builder gets large discounts on labor and materials that you would not get as a consumer.
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Old 04-10-2010, 08:44 AM
 
13 posts, read 37,610 times
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We've decided to go with USAA. The premium is higher (about $400/yr) but the coverage amount is higher and should easily cover rebuilding costs.

The 231k replacement cost from ASI seemed low and they wouldn't go any higher.
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