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Author: kmart00 One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 127815  
Subject: Where to start? Homeowners Insurance... Date: 10/1/2013 2:27 PM
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Cross post from Insurance Forum:
http://boards.fool.com/where-to-start-homeowners-insurance-3...

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Greetings, Fools!

I am in the process of buying my first single family home. I previously owned a condo, and felt like I had a good handle on what we needed for condo insurance.

With homeowners, there is no 'master policy' on the building, so I am a little more concerned with 'getting it right'.

I figured, before calling an insurance agent, I should do a little homework. Enter this forum :-)

So, I am buying a home, and have an existing umbrella policy. I know that means, for liability, I need to have a certain minimum coverage on the home.

I *think* I will be looking for a policy that offers full replacement of contents and rebuilds at market value. I also *think* that I will be looking for a policy that indexes with inflation, to hedge against being under-insured in the future?

Finally, I *think* I will be looking for an additional 'inland-marine' policy for my wife's wedding ring, if single family homeowners policy is anything like my condo policy?

What else should I be considering? I appreciate any and all advice on this!

TIA!
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Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 126384 of 127815
Subject: Re: Where to start? Homeowners Insurance... Date: 10/1/2013 4:56 PM
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Most of the standard policies cover fire, storm, and theft, and a lot more hazards including liability.

In some areas you also want earthquake coverage and even flood insurance.

Your agent usually has standard policies available for your area. He can explain what you need or what decisions are needed very well.

Who wrote your condo policy? Did you like your agent? What does he recommend?

Who insures your automobile? Do they offer homeowners insurance? Bundling often means a discount.

I use State Farm, have for years. They are a mutual company, meaning the policy owners, own the company. So profits go back to policy holders rather than to a third party. I think their rates are fair. I have had several claims. They pay promptly. No complaints.

You can name dozens of other companies. Allstate, Farmers, Travellers, Hartford, etc. Ask friends and neighbors what they use. Get competitive quotes.

Yes, replacement value insurance can be best. Of course other policies are cheaper. And you hope you will never have a claim, but if you do, insurance coverage is great to have.

Riders for extra coverage of jewelry or valuables like art or furs or computer equipment, etc are common. You can also get special policies for things like antique cars, boats, airplanes, RVs, etc. Once you raise the issue, your agent can probably guide you through what you need or should consider.

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Author: kmart00 One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 126385 of 127815
Subject: Re: Where to start? Homeowners Insurance... Date: 10/2/2013 8:45 AM
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thnx!

Called my auto insurer... I was pleased with the premium... I am a bit concerned about their 'rebuild estimate', though.

Buying a home in the 400k+ range, and they estimate rebuild cost at 250k... There is a 50% over clause (ie, they will pay up to 150% of 250k to rebuild house), but I am still wondering if this is too low...

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Author: jrdown Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 126387 of 127815
Subject: Re: Where to start? Homeowners Insurance... Date: 10/2/2013 8:57 AM
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kmart00 ~

Buying a home in the 400k+ range, and they estimate rebuild cost at 250k... There is a 50% over clause (ie, they will pay up to 150% of 250k to rebuild house), but I am still wondering if this is too low...

Last year I contacted Geico (my car insurer) and found out they insure 4-plexes (small apartment buildings) and their price was leaps and bounds better than any other company I used before or contacted. I even had them insure for earthquakes (being in SoCal) with the least deductible. They explained that my rebuild amount does not include the cost of the land or lot. Most sales figures include the cost of the land it sits on but you don't need to insure the dirt. Perhaps that may be the reason that the number isn't as high as you think it should be.

By all means, call them today and have them explain to your satisfaction. Let us know how that panned out.


Robyn

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Author: zol Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 126388 of 127815
Subject: Re: Where to start? Homeowners Insurance... Date: 10/2/2013 8:59 AM
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Buying a home in the 400k+ range, and they estimate rebuild cost at 250k... There is a 50% over clause (ie, they will pay up to 150% of 250k to rebuild house), but I am still wondering if this is too low...

The 400k includes cost of the land.

- zol

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Author: kmart00 One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 126389 of 127815
Subject: Re: Where to start? Homeowners Insurance... Date: 10/2/2013 9:08 AM
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Geico is the insurer I called :)

I figured it was likely ignoring the cost of the lot. But a kitchen in my area costs 25k for a basic redo without appliances. With that cost in mind, 250k just seemed a bit...optimistic?

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Author: TMFPMarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 126390 of 127815
Subject: Re: Where to start? Homeowners Insurance... Date: 10/2/2013 9:38 AM
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Called my auto insurer.

Why wasn't your first call to your current homeowner's carrier? They might offer a longevity reward of some sort.

Phil
Rule Your Retirement Home Fool

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Author: jrdown Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 126391 of 127815
Subject: Re: Where to start? Homeowners Insurance... Date: 10/2/2013 9:50 AM
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Phil ~

Why wasn't your first call to your current homeowner's carrier? They might offer a longevity reward of some sort.

My parents had been with the State Farm agent I introduced them to 35+ years ago. Tom had their homeowner's insurance business and on the two apartment buildings since they were acquired 18 years ago. I will tell you it was a pretty penny that they spent with him each year. When I called the office and spoke with Tom's assistant she said the only way to reduce the cost was to reduce the coverage.

The price we pay is nearly half of State Farm's pricing and it includes better coverage. No, we don't have a specific agent assigned to us but I think Geico's customer service is top notch and they have always been extremely helpful when called.


Robyn

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Author: TMFPMarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 126392 of 127815
Subject: Re: Where to start? Homeowners Insurance... Date: 10/2/2013 10:17 AM
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I think Geico's customer service is top notch and they have always been extremely helpful when called.

I agree with your opinion and share your experience. I'd still make my first call to my current insuror regardless of who it is.

Phil
Rule Your Retirement Home Fool

Disclosure: I own shares of BRK.B. For a full list of the stocks I own see my profile.

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Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 126393 of 127815
Subject: Re: Where to start? Homeowners Insurance... Date: 10/2/2013 11:34 AM
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Buying a home in the 400k+ range, and they estimate rebuild cost at 250k

Keep in mind that when home values rise in your area, most of that gain goes into the value of the building lot. The construction cost of replacing your home on your lot is considerably less than price of the property. Moreover it is determined mostly by square footage of the building and to some extent extras and their quality. Assessors and insurance agents are usually experts at estimating what construction costs are per sq ft in your area.

When you get replacement value insurance, that is what you want. Sq footage of your home multiplied by this year's avg construction cost per sq ft in your area.

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Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 126394 of 127815
Subject: Re: Where to start? Homeowners Insurance... Date: 10/2/2013 11:44 AM
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But a kitchen in my area costs 25k for a basic redo without appliances.

I don't think a kitchen redo is a good comparison. First, a chunk of that $25K is profit. Second, you often have situation where plumber and helper show up to connect the sink in an hour or so and charge you for a full day. When in a new home, they could have done the whole house in that day.

Getting a series of professionals to show up in the order needed to work on your kitchen can be as costly as doing your whole house. Plus your kitchen probably is being done in a house you are living in. So contractor must work around your schedule. That is different than new construction.

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Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 126395 of 127815
Subject: Re: Where to start? Homeowners Insurance... Date: 10/2/2013 12:06 PM
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But a kitchen in my area costs 25k for a basic redo without appliances. With that cost in mind, 250k just seemed a bit...optimistic?

The kitchen is the most expensive area in your house on a per square foot basis, followed closely - or sometimes exceeded - by bathrooms. Living rooms and bed rooms are significantly cheaper because they have no plumbing and no cabinets. Overall, it all averages out.

In my area, pretty basic construction of a whole house runs about $100 per square foot. That gets you cheap carpet, stock cabinets, sheet vinyl flooring in the kitchen and bath, three tab asphalt shingles, and simple architecture. High end work will be 2 to 3 times more expensive. That's also building on a concrete slab, which is normal for my location. I have no idea how needing a basement would affect the costs.

You might do a little investigation into construction costs in your area just to do a sanity check on the insurance.

--Peter

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Author: MetroChick Big funky green star, 20000 posts 10+ Year Anniversary! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 126397 of 127815
Subject: Re: Where to start? Homeowners Insurance... Date: 10/7/2013 10:16 AM
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What else should I be considering?

Flood insurance.

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