I need homeowner's insurance!
September 5, 2011 6:45 PM Subscribe
Some newbie questions from a longtime renter, first-time buyer:
On the one hand, I'd like to buy from a broker, so there's a local human to advocate for me with the company if I have a claim. However, brokers tend to work with just one or two companies, so I can't really use them to comparison shop. Also, I hear Amica is great...and they don't use independent brokers.
What's a good company (any yeas/nays re: Amica)? I'd rather pay a little more for a company that won't totally niggle a legitimate claim.
Should I insure the purchase price of the house, period? I've been told to insure the "cost of rebuilding", but I have no idea what that'd be, and full purchase price would certainly buy me an adequate replacement.
I have two valuable paintings. I've been told I don't need to prove my ownership (take photos, etc). That can't be true, can it? (I'm more worried about fire/water damage than theft, because 1. I'm in a low-crime area, and 2. the paintings aren't OBVIOUSLY valuable to anyone lacking a MFA). FWIW, those are my only two really valuable possessions, so my overall replacement cost of personal belongings is way below what any policy would pay in the event of a total loss (which is why I've been told not to sweat it). Thoughts?
On the one hand, I'd like to buy from a broker, so there's a local human to advocate for me with the company if I have a claim. However, brokers tend to work with just one or two companies, so I can't really use them to comparison shop. Also, I hear Amica is great...and they don't use independent brokers.
What's a good company (any yeas/nays re: Amica)? I'd rather pay a little more for a company that won't totally niggle a legitimate claim.
Should I insure the purchase price of the house, period? I've been told to insure the "cost of rebuilding", but I have no idea what that'd be, and full purchase price would certainly buy me an adequate replacement.
I have two valuable paintings. I've been told I don't need to prove my ownership (take photos, etc). That can't be true, can it? (I'm more worried about fire/water damage than theft, because 1. I'm in a low-crime area, and 2. the paintings aren't OBVIOUSLY valuable to anyone lacking a MFA). FWIW, those are my only two really valuable possessions, so my overall replacement cost of personal belongings is way below what any policy would pay in the event of a total loss (which is why I've been told not to sweat it). Thoughts?
All property insurance companies, above a certain size, are identical. Their actuarial data is identical so all you're paying for is their overhead. They'll all dispute claims to the point where it ceases to be profitable. The two I've dealt with in my life were no exceptions to that rule. Examine their policies re claim filing, rate increases, coverage, proof of loss, etc.
You should insure the cost of loss (how much it would take you to get the property back into functional shape, including furnishings) which any insurance company will be able to estimate from the assessments. They have rules of thumb based on appraisal price (basically just a simple multiplier).
You generally don't need to provide proof of ownership for anything in the house lost to fire, etc., because the default offer is "house replacement value * 1.x for furnishings within." Your contract will generally not let you claim anything more than that, so it's take it or leave it. If you have more stuff than falls under that cap you need to buy a rider (for a few extra bucks a year) for the specific items.
posted by introp at 7:17 PM on September 5, 2011
You should insure the cost of loss (how much it would take you to get the property back into functional shape, including furnishings) which any insurance company will be able to estimate from the assessments. They have rules of thumb based on appraisal price (basically just a simple multiplier).
You generally don't need to provide proof of ownership for anything in the house lost to fire, etc., because the default offer is "house replacement value * 1.x for furnishings within." Your contract will generally not let you claim anything more than that, so it's take it or leave it. If you have more stuff than falls under that cap you need to buy a rider (for a few extra bucks a year) for the specific items.
posted by introp at 7:17 PM on September 5, 2011
Response by poster: Thanks, trinity8.
Can you tell me the insurance company your uncle used? (I'm guessing he'd be delighted to broadcast that dis-recommendation).
Going over fine print isn't my specialty. Which is why I'd like to use a broker. Except that brokers are so often married to one or two companies that they're no more objective than the companies themselves.....
posted by Quisp Lover at 7:19 PM on September 5, 2011
Can you tell me the insurance company your uncle used? (I'm guessing he'd be delighted to broadcast that dis-recommendation).
Going over fine print isn't my specialty. Which is why I'd like to use a broker. Except that brokers are so often married to one or two companies that they're no more objective than the companies themselves.....
posted by Quisp Lover at 7:19 PM on September 5, 2011
I cannot tell, from your post, where you are. Let's assume you are in the U.S. and you are contemplating the purchase of a new house from a builder/developer. Generally speaking, a builder or developer hires a broker to sell and solely represent him for more than one house. This makes it worth the broker's while to spend additional time and advertising money on his product. Conversely, brokers generally don't like to represent a buyer solely for the purchase of a house being sold by a builder. There is a guarantee that there won't be as large a commission and all of the liabilities for the broker's advice remain. The broker would rather show you numerous houses with the possibility that you will buy one listed with his/her agency, resulting in the biggest commission. I have used a buyer's broker before, but never to buy a developed home because there really isn't much room to negotiate with a builder on either price or add-ons.
Regarding insurance, I would insure for the replacement cost of the structure, along with outbuildings and contents. To insure the purchase price means you are insuring the cost of the land and underground utilities that are not likely to burn down in the event of a fire. Be sure the insurance company re-assesses the cost to replace periodically to keep it up to then-current replacement cost.
I would definitely insure the paintings. First off, there is no such thing as a low-crime area. Homes in all types of neighborhoods are broken into. Without proof of ownership/possession and possibly an appraisal how will you convince the insurance company that any such paintings existed, let alone were stolen?
posted by Old Geezer at 7:21 PM on September 5, 2011
Regarding insurance, I would insure for the replacement cost of the structure, along with outbuildings and contents. To insure the purchase price means you are insuring the cost of the land and underground utilities that are not likely to burn down in the event of a fire. Be sure the insurance company re-assesses the cost to replace periodically to keep it up to then-current replacement cost.
I would definitely insure the paintings. First off, there is no such thing as a low-crime area. Homes in all types of neighborhoods are broken into. Without proof of ownership/possession and possibly an appraisal how will you convince the insurance company that any such paintings existed, let alone were stolen?
posted by Old Geezer at 7:21 PM on September 5, 2011
Although I should have intuited it, I did not realize from first reading that you were limiting your question to insurance brokers. My bad. Ignore the first paragraph of my post above.
posted by Old Geezer at 7:25 PM on September 5, 2011
posted by Old Geezer at 7:25 PM on September 5, 2011
Echoing the info upthread, you will want to purchase insurance to cover the cost to rebuild the structure and replace any damaged contents inside. One helpful tool that I have come across is this site that allows you to estimate how much it will cost to reconstruct your house. The figure it came up with closely matched what the insurance agent listed on the policy.
You probably don't want to buy insurance based on the purchase price of the house--you will almost certainly pay way too much relative to what you need.
posted by scalespace at 8:55 PM on September 5, 2011
You probably don't want to buy insurance based on the purchase price of the house--you will almost certainly pay way too much relative to what you need.
posted by scalespace at 8:55 PM on September 5, 2011
Best answer: Our homeowner's insurance is through SafeCo, which promptly and straightforwardly paid for the wind damage to our roof. We're happy with them. Our experience was that our broker left for a different company, and it wasn't worth our trouble to get assigned to a new agent.
The replacement cost can be above or below the purchase price, depending on housing prices (still very high in some places) versus construction costs (now low pretty much everywhere, as the number of new homes constructed is at fifty-year lows). However, in most areas the cost of the land (which, as noted above, doesn't burn down) is a significant portion of the purchase price. It's probably too much to insure purchase price, unless you have expensive furnishings. However, the annual cost of insurance is pretty small in the scheme of things, so only you can answer how much that peace of mind is worth.
I don't have experience with art, but with jewelry and wine it's always recommended to keep copies of receipts, if you have them. Photos or video of any particularly valuable items are always good to have, though be sure to keep them in someone else's house or online. Be sure to read the exclusions in your policy to make absolutely sure that you don't have anything else that is excluded and will require a rider. If the agent tells you, "Oh no, that doesn't require a rider," and the policy says otherwise, you can guess who will win when the screws are to the wall.
posted by wnissen at 9:08 PM on September 5, 2011
The replacement cost can be above or below the purchase price, depending on housing prices (still very high in some places) versus construction costs (now low pretty much everywhere, as the number of new homes constructed is at fifty-year lows). However, in most areas the cost of the land (which, as noted above, doesn't burn down) is a significant portion of the purchase price. It's probably too much to insure purchase price, unless you have expensive furnishings. However, the annual cost of insurance is pretty small in the scheme of things, so only you can answer how much that peace of mind is worth.
I don't have experience with art, but with jewelry and wine it's always recommended to keep copies of receipts, if you have them. Photos or video of any particularly valuable items are always good to have, though be sure to keep them in someone else's house or online. Be sure to read the exclusions in your policy to make absolutely sure that you don't have anything else that is excluded and will require a rider. If the agent tells you, "Oh no, that doesn't require a rider," and the policy says otherwise, you can guess who will win when the screws are to the wall.
posted by wnissen at 9:08 PM on September 5, 2011
When I buy artwork from a gallery I receive certificates of authenticity which I've put in a safe deposit box.
posted by brujita at 12:09 AM on September 6, 2011
posted by brujita at 12:09 AM on September 6, 2011
Response by poster: "You probably don't want to buy insurance based on the purchase price of the house--you will almost certainly pay way too much relative to what you need."
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Why is that?
Also: several people have restated that I need to insure the rebuild price. As I said up top, I find that impossible to ascertain. For one thing I wouldn't rebuild "the same" house, anyway. If I insure to the purchase price of the house, then I'd be able to purchase another house in the same range, no?
posted by Quisp Lover at 7:28 AM on September 6, 2011
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Why is that?
Also: several people have restated that I need to insure the rebuild price. As I said up top, I find that impossible to ascertain. For one thing I wouldn't rebuild "the same" house, anyway. If I insure to the purchase price of the house, then I'd be able to purchase another house in the same range, no?
posted by Quisp Lover at 7:28 AM on September 6, 2011
Response by poster: Ok, I see now that wnissen answered that: if the house burns down, the land still has value. So if I pick up and buy another house, I can apply both the insurance money plus whatever I get for the land. And constructing is cheaper.
But I also like wnissen's point that the difference in annual premium paid will actually be pretty petty, so there's no need to split hairs.
posted by Quisp Lover at 7:31 AM on September 6, 2011
But I also like wnissen's point that the difference in annual premium paid will actually be pretty petty, so there's no need to split hairs.
posted by Quisp Lover at 7:31 AM on September 6, 2011
Response by poster: I just tested on Amica's automated quote site, and it looks like the cost of an extra $100K worth of insurance (on the dwelling itself) is a bit under $500/year. Not exactly chicken feed (especially over the course of a couple decades), but not huge in the scheme of things. So I'll err on side of caution. After all, isn't that what insurance is all about? :)
posted by Quisp Lover at 9:33 AM on September 6, 2011
posted by Quisp Lover at 9:33 AM on September 6, 2011
This thread is closed to new comments.
When you work with your agent and explain the value of the paintings he will give you the different ways they can be included in the policy. There are different options for doing this and s/he will explain it.
Replacement cost policies can be appealing but you do need to go over the fine print. My uncle had his two-year-old factory burn down and the restrictions on his replacement cost policy were so severe he was not able to afford to rebuild.
posted by trinity8-director at 7:15 PM on September 5, 2011