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Any rule of thumb people use for determining how to decide the amount of insurance one obtains for their house? I feel like my current amount is a little low...$132 per square foot. I know there's tons of variables, but I'm wondering if there are any guidelines that at least provide a place to start.
Most people insure for the projected cost to re-build the house, assuming a total loss. In some areas this might be more or less than the Fair Market Value. And you deduct the land-only value.
Most people insure for the projected cost to re-build the house, assuming a total loss. In some areas this might be more or less than the Fair Market Value. And you deduct the land-only value.
Thanks, that was actually my question...is there a rule of thumb for estimating the cost to rebuild. $100/sf? $150? $200?
Last edited by carolinadawg2; 03-16-2015 at 10:00 AM..
Insurance companies would like a higher estimate and often use $150 as a guideline in my area. Rebuilding from a total loss may or may not include disposal of the entire home and reworking the lot before rebuilding so an accurate estimate is difficult to determine. Your current level of insurance does not seem out of line.
Insurance companies would like a higher estimate and often use $150 as a guideline in my area. Rebuilding from a total loss may or may not include disposal of the entire home and reworking the lot before rebuilding so an accurate estimate is difficult to determine. Your current level of insurance does not seem out of line.
Most insurance companies have a program where they put in the size and features of your house and it calculates what it should be insured at. Your content coverage is usually a set percent of your overall structure coverage, 70% or whatever.
Using a flat dollar/sq foot is difficult because some houses have nicer features than others, wood floors vs sheet vinyl, builder grade wood trim vs custom trim, etc. Also keep in mind that part of your fair market value is your land and you don't add that into the cost and it's a really bad way to determine your home value..think back to 2008 and the housing market crash and how much value houses lost, but the cost of drywall didn't go down.
Also keep in mind that in the event of a natural disaster, hurricane, major tornado, etc., building supply and labor costs often go up so the actual cost to rebuild then will likely be more than the cost if you have a house fire.
You insure it for its replacement value instead of market value !!!
Replacement cost is the amount of money it would take to repair, replace or rebuild your home with materials similar to the kind and quality used in constructing your home.
Using an insurance agent with (CS) Common Since, he or she will be able to help you with this !!!
You insure it for its replacement value instead of market value !!!
That is a very important point especially in regards to the contents. Cash value of the contents can be dramatically less than replacement cost. We had a house fire and on the inventory sheet they had both the replacement and cash value listed. If I had to guess the cash value on average was about 30%.
Most people don't realize how stuff they have and what it will cost replace it. Just look at your spice rack and add it up. That by itself can be hundreds dollars.
You insure it for its replacement value instead of market value !!!
Replacement cost is the amount of money it would take to repair, replace or rebuild your home with materials similar to the kind and quality used in constructing your home.
Using an insurance agent with (CS) Common Since, he or she will be able to help you with this !!!
Thanks, I get the concept of replacement value, but I'd like to have some information to balance against what my agent thinks, since she obviously has a vested interest in making the number higher, rather than lower.
Not a big fan of common since (sic) in this type of situation, given that I don't believe there is any such thing.
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