Situation: We've had insurance with a specific company for years, nearly 20 years. At no point, were we ever asked for information to change our premiums. On our own, we would periodically pay for home inspections from our own pockets, to catch potential problems early.
Last year there was a major hailstorm, so bad that our street was declared a "catastrophic area" automatically entitling us to complete roof repair under our insurance rules. We had several roof inspectors come out and got a fair bid. In fact, our insurance company paid more than the amount suggested, asking the roofers to upgrade the roof to its former standards! That was a nice surprise.
Current status: Perhaps it is just coincidence but we received a bunch of papers the other day, supposedly wanting to make sure our home was covered for getting it rebuilt in today's market, if something should happen to it. There were illustrations of homes and we were to pick one that "most represented" ours, etc. Is this standard operating procedure or should I be wary? We happen to live in an area with soaring property taxes and sinking home prices (temporarily). It is a buyers' market, if anyone wants to take on the interest rates to buy a home these days.
We over insured our home those many years ago, assuming the price would go up, as it has. But I don't want to go through a complicated process and possibly pay more for insurance or find our house in undervalued in today's market. It is just the wrong year to try and get a fair value on a home here. If prices rise, our home would then be underinsured.
Has anyone else gotten such a poll? Are they valid?
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Comments: 35
How's that for cynical? :-)
We've never made a claim before, I didn't even know what to do LOL, so I called just out of curiosity, and I must say we were treated wonderfully so far! The damage was done a couple of months ago, but being new homeowners the insurance company just wasn't something we thought of. My husband repaired the pipe in the bathroom himself.
We're suppose to have someone call us on Monday and we were given the name of a company to come out and give us an estimate. So we'll see what happens. :)
Living in an area that has been declared a disaster area, I think these surveys are common and do eventually lead to higher premiums.
I think it's smart that you pay for a home inspection every year...how much does that cost you?
A good insurance company and agent will do the best thing for you as well as them. Everyone should monitor their insurance values, deductible, and value of their house yearly.
Here is my cost/risk analysis on home inspections, right off the top of my raccoon head. It costs between $200 and $400 a year or less than $20 to $40 a month to make sure that our home is not silently rotting away in some unseen place. We do our own visual and other exams but those inspectors go where we don't dare!
Many people see these numbers and think they are not adequately insured and will ask the insurance company to increase these amounts. All this does is cost you more money for coverage you don't need. So, for instance, you may purchase your home for $300,000 and your insurance Replacement Cost coverage may be $215,000. The way the insurance company figures out the replacement cost amount is by asking you a series of questions about your home. They should ask you for the square footage, garage type and size, roof type, flooring type, whether you have a painted exterior or siding, etc. These things will all factor into the Reconstruction Cost of your home.
The good insurance companies will also have an additional allowance automatically built into your policy that allows for an additional 25%-75% of that Reconstruction cost amount just in case unforseen circumstances arise (such as a skyrocket in the price of lumber or building materials). Also, this amount should gradually increase each year as your policy renews to allow for the slight changes in building costs as each year goes by.
It is your responsibility to report any major home improvements to your insurance company. If you do a remodel, add a room, take out carpet and put in tile, etc. These things will affect your reconstruction cost, so if you don't report them, they won't be factored in should a loss occur.
Keep in mind that purchasing more insurance then you need does you NO good, except waste your money. Your insurance company will NOT rebuild your house and then cut you a check for the extra $100,000 of insurance you bought that wasn't necessary. That's not how insurance works. The purpose of insurance is to bring you back to the same state you were in BEFORE the loss occurred. It's purpose is NOT to allow you to profit from a loss.
As for the paperwork you received from your insurance company, I'm hoping they sent you more than just some drawings of homes asking you to pick the one closest to yours. Hopefully there was a series of detailed questions asking you about the specifics of your home. Things like I mentioned earlier: roof type, flooring type, square footage, etc.If not, I think I would be looking for another company.
If you want to tell if a company is reputable, look for their AM Best rating. This is a rating which every insurance company receives and it determines the financial stability of the company and can sometimes give you an indication of the likeliness of whether or not they'll pay their claims fairly and quickly. You want to look for a company with an A or A+ rating. Anything else really isn't good enough, in my opinion.
Very few policies cover things such as Earthquakes or Floods, for instance. This is because there are state and National agencies which are run by the government that provide these types of insurance. This is why many people in the Hurricane regions weren't covered. Many of them had no Flood Insuarance and thought their homeowner's policies would cover the loss. Not true. This is why it's important to know where you stand and READ your policy.
Wow, this really taught me a lot. I thought I knew about insurance until I read your article. Would you mind if I interviewed you online or used your info at my Real Estate Blog, which is aimed at helping homeowners maximize their knowledge of home-related issues and make smart decisions? I don't sell a thing there and don't intend to. But I do feel passionately about people having access to the type of information you just wrote because I think a lot of people don't or aren't told the facts. I know we weren't and we asked a LOT of questions from our agent about replacement cost and all that.
Here is the issue we ran into with our insurance company when we had our roof replaced. They weren't familiar with LOCAL costs. So should we do a private assessment?
Our insurance company sent out an inspector to inspect all the property that was insured through them. It was at that point that $200 more was added to the premium. They took photos and sent out letters telling homeowners what they needed to do to keep coverage through the company. Many people had to build decks and fences around their pools. Some people were told to keep the shurbs cut away from the house as well as many other things. Everyone insurance raised.
Our insurer has unannounced inspections, which may lead us to get a different one (nothing like some strange guy skulking around your house to wake you up in the morning). One saw a trampoline and even though it was fenced in, we were told our premiums would be raised if we didn't get rid of it -by well over $800 a year! We got rid of it.
Ours is unexpected too. I noticed a man in the back yard with a camera. I put my pistol in my pocket and off I went. LOL So is that trespassing??? LOL
After six years of home ownership and no problems or claims, my wife and I also received some papers with illustrations of homes with instructions to choose which one most resembled our own. As Jill stated, it also contained 'a series of detailed questions asking you about the specifics of your home'. When it took me a little while to compile the information and send it in, I received a second copy along with a letter that said I had to fill this out and return it. So I did.
Our neighborhood has thankfully gone through nothing like yours, but we now await with some trepidation for our new home insurance policy rate. Should be coming in about a month.