Can we talk homeowners insurance...

Nothing to do with weight...But you know how guys like to shoot the breeze about stuff.  Anyways my annual policy came up for renewal.  It's with Safeco...Not a bad company...fairly well known.  Here is the problem.  Each year they want to raise the coverage on my house.  They are putting the dwelling coverage at $316,000. and the garage at $31,000.  It's about a 2% increase in coverage.  Here is the issue.  I live in the Central Valley of California.  Home prices have dropped anywhere from 40-60% since the high of 2007-2008...The worst in the nation!!  Replacement costs have dropped and dropped.  Contractors (and subs) are very very hungry.  My wife and I would only be able to sell the home for about $200,000.  So what gives?  Would love you hear some imput and are they jacking me around?  I think I could replace the house for $200,000. including all the building fees and similar fixtures.  But if I don't insure for at least 80% of replacement cost, they can say I underinsured on purpose and give me less.  Thoughts??

Have you thought about insuring with another insurance company? There is nothing wrong with shopping around every year to see which reputable company will give you the best price. I'm not saying go for some fly by night insurance agency, but geico, state farm, progressive, all state, etc...are always in competition with one another.

Scott

Insurance companies tend to use a formula to determine an acceptable replacement value. for larger companies like Safeco, the formula may be proprietary based on their own experience. You may be able to appeal the insurance amount to their underwriting department (not the agent, who will probably not have any real input in that value, but rather the home office underwriter). My guess is that you will not have any luck in getting it dropped.

Yes, you would be penalized if you do not insure to their estimated replacement cost. That penalty is in direct proportion to the amount your insurance loss is less than the replacement cost. In reality, they would probably refuse to renew the policy if you did not agree to their replacement cost.

Therefore, shopping around is probably your best option if you feel that the premium is higher than you want to pay. Although I'm not familiar with California insurance laws and policy forms, do be certain that the policy forms are clearly the same when you do a cost comparison. Most states have several approved forms that offer slightly different coverage combinations. There can be nothing worse than having a loss and not being insured due to a policy exclusion.

Hey hey a subject that is very near and dear to my work.  I actually build analytical tools for the insurance companies so I will add a bit of insight.

The bit is, most of the big insurance companies rely on their existing customer base not shopping around at time of renewal.  The company that claims they have the largest cusomer base is correct they do, but most of their customers are established and don't leave.  Tools exist that allow companies to track their customer turnover and win loss ratio for quotes.

So shop around and let carriers know that you are shopping and comparing hell work in other carriers quotes into your conversation.

Second bit is look for policy packages.  Some times the total price is lower sometimes not.  I know when I bought my HO policy last year it was slightly more than another company but the small increase came with twice the auto coverage, so over all it was a better policy. 

Remember you Insurance company has no loyalty to you other than what is stated in your policy so do not feel that you have any loyalty to them.

Being in CA you should consider yourself lucky in that CA controls what information can be used to quote a policy, most states manage what can be used but things like credit are still used where CA has said No to credit scores being used in pricing.

Cabin, I own an insurance agency and have been selling insurance for over 25 years so here is my input.  There are 5 - 10 companies that supply replacement cost software to the insurance industry and they all base their increases, decreases, and initial costs by zip code.  About every 5 years an insurance company will put it out for bid and change providers.  Generally compnies are trying to get as accurate of information as possible.  Included in the final replacement cost calculation is debris removal (about 10%), and increased cost of construction in case of a diaster (when many homes are damaged at the same time costs of labor and materials go up).  By changing companies you may find one that comes up with a lower replacement cost, but it will be rectified when they do their next update to the software.  A 2% increase is very low, they are usually 4%-6%.  The coverage on your other structures is standard in ISO policies at 10% of the dwelling coverage, you can increase it if needed, but you can not decrease it.

I do suggest that you call 2 other agencies about every 5 years to get quotes for your household package (auto, home, umbrella, and toys).  Like any other business there is competition and you may be able to save some money.  It only costs you a little of your time to compare,  but it is too much of a time committment to do it every renewal..

Thanks for all the info.  The one thing I will say is that over all they are very cheap on a $2,000,000. umbrella...covering house, 2 rentals, and cars.  Both my daughter are on the umbrella with their cars...which can make all the difference in the world if one of u****s a school bus!!

My $2,000,000 umbrella only added about $27 a year to the cost of my homeowners insurace.  I was surprized how little it cost!  I have my cars insured with the same company.  My insurance company just sent me a detailed survey about my house, so they can accurately calculate replacement cost value.