How much should I budget for home insurance?
September 23, 2018 3:21 PM Subscribe
I'm working on a rent vs own evaluation for Silicon Valley, and my input of least confidence at the moment is the cost of home insurance. What's a good rule of thumb for insuring a home in the bay area?
This isn't an urgent decision, more an idle weekend speculation on whether renting is more affordable than buying in the land of million dollar bungalos and equally large taxes.
Right now, my formula is 0.2% of purchase price, which for a 1.3Mil home is $2,600 a year. But that price includes the cost of land, which presumably is not affected much by earthquakes or hailstorms. I know there's a lot of variables in the mix, but am I in the ballpark, or missing something obvious?
This isn't an urgent decision, more an idle weekend speculation on whether renting is more affordable than buying in the land of million dollar bungalos and equally large taxes.
Right now, my formula is 0.2% of purchase price, which for a 1.3Mil home is $2,600 a year. But that price includes the cost of land, which presumably is not affected much by earthquakes or hailstorms. I know there's a lot of variables in the mix, but am I in the ballpark, or missing something obvious?
Best answer: Sunnyvale, 94086, Farmers - about $1,136 this year.
Dwelling covered for $572,000, plus liability, personal property and a few other things. I think I also get a multi-policy discount. Market value is closer to $2M vs the $1.3M you specify. But as you say, house replacement value is really pretty decoupled from the market value around here.
So yeah, you're in the ballpark but I think it's probably a little cheaper. It's pretty small relative to property tax in most areas.
posted by GuyZero at 3:29 PM on September 23, 2018 [1 favorite]
Dwelling covered for $572,000, plus liability, personal property and a few other things. I think I also get a multi-policy discount. Market value is closer to $2M vs the $1.3M you specify. But as you say, house replacement value is really pretty decoupled from the market value around here.
So yeah, you're in the ballpark but I think it's probably a little cheaper. It's pretty small relative to property tax in most areas.
posted by GuyZero at 3:29 PM on September 23, 2018 [1 favorite]
Normal home insurance does not cover earthquakes. You have to get special earthquake insurance, which is quite pricey.
posted by rockindata at 3:42 PM on September 23, 2018 [4 favorites]
posted by rockindata at 3:42 PM on September 23, 2018 [4 favorites]
You should also consider wildfire risk. Houses in the hills are going to be less and less insurable as climate change makes firestorms like what was seen in Santa Clara and Redding and the Oakland Hills ever more likely.
posted by rockindata at 4:02 PM on September 23, 2018 [2 favorites]
posted by rockindata at 4:02 PM on September 23, 2018 [2 favorites]
You have to get special earthquake insurance, which is quite pricey.
You can get earthquake insurance, but it is not mandatory. And yes, it is pricey.
posted by GuyZero at 4:11 PM on September 23, 2018 [1 favorite]
You can get earthquake insurance, but it is not mandatory. And yes, it is pricey.
posted by GuyZero at 4:11 PM on September 23, 2018 [1 favorite]
As a Californian, nthing that earthquake insurance is separate, and expensive. My earthquake premium is basically equivalent to my yearly homeowner's premium.
Also, the wildfire-risk maps are continually being redrawn, and new areas that weren't previously thought to be high risk can now be categorized as so. This could mean much higher insurance rates in neighborhoods where traditionally rates were lower.
posted by BlahLaLa at 5:02 PM on September 23, 2018 [1 favorite]
Also, the wildfire-risk maps are continually being redrawn, and new areas that weren't previously thought to be high risk can now be categorized as so. This could mean much higher insurance rates in neighborhoods where traditionally rates were lower.
posted by BlahLaLa at 5:02 PM on September 23, 2018 [1 favorite]
Throwing in another kind of insurance, the low-lying areas around the bay built on fill are going to be ever more vulnerable to flooding both due to extreme storms and rising sea levels(especially if a storm coincides with a king tide).
posted by rockindata at 5:18 PM on September 23, 2018
posted by rockindata at 5:18 PM on September 23, 2018
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posted by Anticipation Of A New Lover's Arrival, The at 3:25 PM on September 23, 2018