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Homeowner insurance, replacement coverage

catch22catch22
in Other Investing
Any homeowners with insurance asking questions or finding large price increases in policy costs ???

We've given attention to home insurance replacement values over many years, for a total loss of the home. Note: our mortgage is paid from long ago and our insurance doesn't renew for several months.
We have not called our agent yet regarding the recent large increase in lumber and many other building materials; but we're pondering the impact relative to our home insurance coverage, even though it contains an inflation clause.

I offer this link for informational purposes only.
Home Insurance Overview

Lumber cost adds $24,000 - $36,000 to new home construction pricing. I gave this price range, as Bloomberg offered the low number, but I have not yet discovered why.


The rough cost to build a house.....

Thank you,
Catch

Comments

  • hank
    edited May 2021
    +1 @Catch

    Whenever I’ve inquired of my agent in the past, they’ve told me there’s an automatic yearly increase in home value that gets factored into my policy - so the insured amount rises every year. If you’re asking whether my insurance has “gone through the roof” as of late? No, it hasn’t - yet, anyway. Also, after each of several additions / major improvements to the home I’ve updated the info for the insurer.

    But - I’m stunned at the increases in lumber prices - and my understanding is many other building materials (like cement) have gone along for the ride. The run-up in copper (used in home wiring) has been astronomical as well.

    “Transitory”? Dunno. To me that word suggests prices will go back down to where they were a year or so ago. Doubt it.

    Just noticed you have Inflation Clause. That ought to keep you in the ballpark.
  • catch22catch22
    A decent overview of building materials pricing changes from a few months ago.

    Any other lists for posting appreciated.
  • hank
    edited May 2021
    Well …. Maybe folks should check on whether the car they’re driving is insured at replacement value as well. I can remember when $40,000 (average new vehicle price) bought a pretty decent house.

    “Earlier this year the average cost of a new vehicle surpassed $40,000 for the first time, the auto-research firm Edmunds found.”

    From: Used-car prices soar and the sticker shock may get worse - Link

    Anybody thinking of selling a second vehicle they may have - but don’t desperately need? Suppose I could drive the 16-17 year old pickup truck a while if the newer car would fetch a fat price.

    Getting crazy.
  • MrRufflesMrRuffles
    We just refinanced our mortgage and had to get an updated replacement estimate from our insurance company. Compared to the estimate we got about 4 1/2 years ago, replacement costs went up about 40% which meant that even though we reduced our mortgage costs, our home insurance costs increased.

    Our coverage amount increases incrementally every year but I was wondering what would have happened if we had needed a replacement under our old policy limits. Turns out our policy has a 30% cushion that would have covered the increased costs.
  • Old_JoeOld_Joe
    We're holding our breath regarding any coverage renewal at all on our weekend place up at Guerneville, CA. The insurance companies are all desperate to cancel policies because of the ever increasing fire danger. I can understand that... if I were the insurance company I'd feel the same way.
  • little5beelittle5bee
    If you live in FL, your insurance rate increase is likely due to the homeowners replacing roofs before the Hurricane Irma time frame expired...whether they were legitimately affected or if they just needed to replace an old roof. Unfortunately, there were too many of the latter.
  • Mona
    In February, my homeowners replacement coverage policy increased 29% with Chubb. I have not had a claim with them in 30 years. Being that I consider Chubb crème de la crème in this market, I will not look elsewhere.
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