Another Gouge

[Nanook]

Just got word today that my Ins. Co. for the house is re- evaluating my house on the basis of COMPLETE re-build instead of Sales value. My Policy will be raised by 1/3 [33%]

Been shopping around and 3 Companies gave different re=build prices. Apparently this is becoming the norm, and on checking, there is NO governing body to control this.

Just a heads up on this, as a few friends have got the same thing from their gougers as well.

 

Still shopping........................

 

 

On this ocasion please ignore my Signature.

[forrest]

My house insurance is the same way...rebuild cost is almost 3 times the purchase price.

I don't get it.

[BillM]

If the value of your house is increasing, why would you think you'd pay insurance on what you'd pay for it?

 

That doesn't make much sense. You should be paying insurance on the fair market value of the house.

[forrest]

If the value of your house is increasing, why would you think you'd pay insurance on what you'd pay for it?

 

That doesn't make much sense. You should be paying insurance on the fair market value of the house.

 

Who said my house increaes

At the time of purchase the insurance quoted as almost 3 times what it was worth (the contents have little value). I bought the house 3 years ago, it has barely increased in market value. I guess if my house blew up and demolished my neighbors house the rebuild cost for both houses would be what they quoted.

 

The original posters point is.....who is going to do a total rebuild on a house boat when it is cheaper to buy new?

I bet the insurance company won't. They are simply gouging people. Is there a way around this? (and please do not say "shop around")

 

forrest

[oncogene]

Sort of similar, but I wonder if anyone else ever look at the claim cost if you ever claim anything.

 

 

Few years ago my car was rear-ended. Til 2 years ago be4 I switched insurance company I asked about that claim. I was not at fault but the other guy who hit me just happened to be in the same insurance company.

 

The repair cost on my car was $8000 and I rented a car for a few days, plus the towing cost, the total should be <$9000. And guess what's the claim cost on my side? $12000. Where the heck did that extra $3000 come from?

 

The guy who hit me drove a used 2nd-hand Accord. There was no third-party property damage in the accident. I did not claim a single dollar of injury/medical expense (I had sore neck/shoulder for awhile). Guess what's the claim cost on his side? $35000! You can buy a brand-new Accord with that money!!

 

I think the insurance company just jacked up the numbers so they could increase the premium more on that guy. Poor guy just got his license.

Edited August 8, 2008 by oncogene

[Greencoachdog]

What are you going to do Jack?... not pay it??? Pay the minimum... 3 mos.? 6 mos.?... and keep shopping!

[JohnF]

Just got word today that my Ins. Co. for the house is re- evaluating my house on the basis of COMPLETE re-build instead of Sales value. My Policy will be raised by 1/3 [33%]

Been shopping around and 3 Companies gave different re=build prices. Apparently this is becoming the norm, and on checking, there is NO governing body to control this.

Just a heads up on this, as a few friends have got the same thing from their gougers as well.

 

Still shopping........................

On this ocasion please ignore my Signature.

 

Just curious - what does the policy say the company will have to pay for if the building was totally destroyed by fire?

 

I'm not a big fan of insurance companies but think about it from their perspective. Say the house was completely destroyed and was insured for full replacement, whatever their language is. First they have to remove the debris from the fire (or whatever) perhaps including the foundation. That could be a fairly big hit by itself. Then they have to start rebuilding. Some older homes are pretty big and have depreciated over the years. That's why they're relatively inexpensive to buy. But to replace them from the ground up can be pricey, in Ontario likely $100/sq.ft. and up. I can show you houses that would only sell for $150k including the lot worth approximately $50k so $100k for the structure. The replacement on the building would be well in excess of $200k plus the cost of demolition and site clearing, at least $250k. That's how you get a replacment cost estimate of double (or more) the market value today, and easily 3 or 4 times what was originally paid in some cases. Perhaps if you were willing to insure for only the market value of the property less the land value without any replacement or cleanup provisions your insurance could be much cheaper but not many folks would be interested in that kind of protection. Property values took a big jump early in 2004 and have generally been trending up for years so basing insurance on the original price is not realistic.

 

The contents is a whole nuther deal. We went through an interesting exercise once and made a list of the contents of our closets along with the replacement cost. It was staggering.

 

BTW. How many people have a list of contents just in case. One way to do that is to photograph or video everything in the house. It's hard to do from memory if there is a claim so photos are good. We burned cd's of all our rooms and closets a few years ago and probably should do them again. Then make dupes and store the cd at the office or with a friend, same idea as computer backups at work.

 

JF

[Landlocked]

John, you are 100% correct and couldn't have said it any better. I'm a broker and have this conversation about 10 times/day....your policy is setup to take debris away, "rebuild" with new materials and the market/selling value of your home has absolutely no bearing at all.

Try explaining that to someone who purchases a large Victorian home for $300 000 but they have to insure it for $700 000...

[spooner_jr]

The insurance company is covering you to rebuild the house in the event you have a total loss. Market value of the home has no bearing. If you have a 2000 sq ft house in the Beaches, and the same house in Peterborough, the coverage amount should be similar, as building costs would be similar. The other thing you have to realize is the insurance company has to pay to rebuild the house exactly the way it is; if you have an older home, that may mean double brick, 10" baseboards etc. If you are in a subdivision, the insurance company has to pay a builder to do a one-off build, so it will cost more than the developer who was building a couple of hundred at the same time.

 

The original posters point is.....who is going to do a total rebuild on a house boat when it is cheaper to buy new?

 

House boat?

Edited August 8, 2008 by spooner_jr

[Nanook]

I solved the 'problem'.Switched over to my vehicle Ins Co.

Got the same re-build quote, but $300 cheaper + 15% off my car insurance.

Works for me, cant be without insurance EH! Glen.