Reconstruction Costs- WTH?! (Tucson: homeowners insurance, appliances, how much)

[sierraAZ]

When I bought my house (new construction) almost a year ago I know I grossly overinsured it (by about 16-17%) for the purchase price, but I liked the peace of mind. Today comes the renewal paperwork informing me that reconstruction costs have drastically gone up since their last assessment; thus, they recommend raising the replacement value even more - 3% more than the purchase price. On the other hand, I do know what the builder sells the same houses for... If they were THAT much in the hole (and Tucson is one of their BEST markets) you'd think they'd be bankrupt by now.

It's not a huge increase and I don't really care, but I fail to see the logic here...

[sickofIL]

Insurance companies need to cover their costs too. Just like the Municipalities. They want more money, we have to pay. Just like your car insurance. Your car gets older and the value decreases but it costs more for the insurance. It's because they can. I'm sure that if they could charge you for your home just like they do for your car they would.

[sierraAZ]

Originally Posted by sickofIL

Insurance companies need to cover their costs too. Just like the Municipalities. They want more money, we have to pay. Just like your car insurance. Your car gets older and the value decreases but it costs more for the insurance. It's because they can. I'm sure that if they could charge you for your home just like they do for your car they would.

Well, of course. My point was they claim the cost of construction has gone up significantly. It's not like they demand that I insure my house at this replacement value. That's up to me. They simply suggest that in case of a total loss I may not be adequately covered should I not follow their advice...

[sickofIL]

Even if you follow their advice you likely will not be fully covered.

Do you have a complete list of everything in your home? It's pretty much impossible. They usually only cover up to a certian $$ amount of the contents. It's very surprising how much it will cost to replace EVERYTHING!

I have been putting together a list of all of the tools and equipment that I have been amassing over the years (car stuff) and am not yet finished. I am up to $41k. I have already talked to my insurance agent about this and will be adding a rider to cover it. Now I need to go through my home and see what I have there. Some of my automotive books are likely not replaceable. Just thinking about the simple things like CD's, old albums, (the vinyl kind....aging myself here) DVD's, video tapes, audio/video equipment, computers, appliances, cloths, etc....... I doubt most people have enough coverage.

[sierraAZ]

Originally Posted by sickofIL

Even if you follow their advice you likely will not be fully covered.

Do you have a complete list of everything in your home? It's pretty much impossible. They usually only cover up to a certian $$ amount of the contents. It's very surprising how much it will cost to replace EVERYTHING!

I have been putting together a list of all of the tools and equipment that I have been amassing over the years (car stuff) and am not yet finished. I am up to $41k. I have already talked to my insurance agent about this and will be adding a rider to cover it. Now I need to go through my home and see what I have there. Some of my automotive books are likely not replaceable. Just thinking about the simple things like CD's, old albums, (the vinyl kind....aging myself here) DVD's, video tapes, audio/video equipment, computers, appliances, cloths, etc....... I doubt most people have enough coverage.

I have more than enough coverage of personal property. I'd forgotten the number - it shocked me! Anyway, I was curious about the construction part. Perhaps the RE agents would have something to say.

[michael krotchie]

Originally Posted by sierraAZ

I have more than enough coverage of personal property. I'd forgotten the number - it shocked me! Anyway, I was curious about the construction part. Perhaps the RE agents would have something to say.

Hey Sierra,

I have no idea what basis your insurance company has for raising construction costs. I know for a fact that the constructions costs have fallen ~15% in the last few years because I've been involved in a few semi-custom home builds and some commercial construction deals.

Obviously I can't guarantee anything but I'm thinking if you made some calls to a couple of general contractors they could substantiate what I've said. If you explain to them what your insurance company told you I bet you'd hear the disbelief in their voices immediately.

[xalrightythenx]

Hey!

I actually received a notice from my homeowners insurance carrier notifying me of increases across the board as a result of elevated claims nationwide. The jist of it was.."we actually have to pay out claims on these policies ?!*^&#^ because of hurricanes etc.. we still need to make our money and we're passing the buck on to you".

I saw 20% increase from last years premium myself. My agent was basically like "sorry, it is what it is".

That combined with the $900 increase in my property taxes just has me tickled.

What can you do

[sierraAZ]

Originally Posted by michael krotchie

Hey Sierra,

I have no idea what basis your insurance company has for raising construction costs. I know for a fact that the constructions costs have fallen ~15% in the last few years because I've been involved in a few semi-custom home builds and some commercial construction deals.

Thank you for confirming it, Michael. I thought it was ridiculous. As I said my house already was overinsured. I don't feel like arguing over another 5K of coverage, but they may get into the habit of doing that...

Originally Posted by xalrightythenx

Hey!

I actually received a notice from my homeowners insurance carrier notifying me of increases across the board as a result of elevated claims nationwide. The jist of it was.."we actually have to pay out claims on these policies ?!*^&#^ because of hurricanes etc.. we still need to make our money and we're passing the buck on to you".

I saw 20% increase from last years premium myself. My agent was basically like "sorry, it is what it is".

That combined with the $900 increase in my property taxes just has me tickled.

What can you do

It's not the premium that went up - just the "suggested" coverage because of the allegedly increased construction costs. I put a lot of effort at the time into selecting a very reputable (supposedly) insurance company... Hardly any other offers 130% dwelling coverage.

[sierraAZ]

I called them and the story is actually different. I suppose the renewal letter is just boilerplate justifying the coverage going up a little every year to keep up with inflation. It's not that they think rebuilding my house will cost that much. Basically, it was my own decision/fault I overinsured it in the first place and they just increase this amount a bit every year. I can change my mind, of course, but I like to have my rear covered and overcovered when a lot of money is involved.

[michael krotchie]

Thanks for the update Sierra. Good reminder for all of us to check our policy coverages!