How do you value your old house for insurance?

kimkitchyMarch 4, 2011

We've just been reviewing our homeonwners insurance. I sat down with our agent today to ask questions and talk about how to determine how much insurance we should have on the house. Ours is a 1913 bungalow, 1 +1/2 stories, about 1700 square feet in total. In the 18 years we've owned our home, we've done numerous upgrades and restorations. Too many to list here, but it's had all new plumbing, heating, electrical, sewer, phone, electronics, roof & insulation and remodeled kitchen and baths, repaired plaster, refinished wood floors - most of it in the last 5 years. What's particularly hard to value is "replacement".

I guess you'd have to look at what another old house in similar condition to ours would sell for in our market. It may not be practical/affordable to insure it for what it would cost to build new buying heart pine floors and the old growth doors and woodwork and old glass and antique light fixtures and hardware, etc.

Our insurance agent is very helpful and nice, but her computer is only able to estimate things in general terms. Examples of variables they use are: square feet, type of structure, building type - standard, above average, custom or premium? Building costs per square foot in our area are $120 - $150/ sq.ft. We talked about getting an appraisal, but she thought the same generalizations would likely apply with an appraisal; "X square feet", "Y quality construction", and they may add in some special items, and apply $ per sq.foot.

I don't know that I have a succinct question here, but I think I'm having trouble thinking about how you value an antique, and the special work you've done restoring woodwork and light fixtures and hardware, and the excellent layout and finishes you've carefully added to your kitchen and bath. We just need to decide what dollar value we'll put on the "structure"... We'll assign an updated figure, but whatever it is I'm pretty sure it won't be enough. ...Maybe because we've put more money into the house than we should have. ...Maybe because I just couldn't bear to lose our special home. Here's hoping I'll never need to know.

Do any of you struggle with this concept?

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We have a restoration policy for our old house. We had it appraised.The company is called Middle Oaks- They insure older home. We had a large claim this year and they were fast and fair

    Bookmark   March 4, 2011 at 4:11PM
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Your insurance agent may be nice, but her computer program estimates may not be what you need. You may need an insurance appraisal that supports an excess value, full replacement with like materials policy. It's not a matter of standard or premium-grade. Old houses are a whole 'nother ball game.

You won't need the higher declared value policy for the phone, electric, insulation, plumbing, remodeled kitch and bath, electronics or refinished floors, (no matter what you spent on them), etc. but you may need it for antique light fixtures, heart pine doors, plaster walls, slate roofs, etc. The cost per square foot calculations will leave you under-insured if you want to put it back the way it was.

An insurance appraisal will both highlight what additional features need to be covered but also verify that they are there, in the building.

This kind of policy will be more expensive than "regular" policies, but may save the day if you have a serious loss as the cost to replace high-quality, historic, materials may be more than the insurance company will allow and then you'd be stuck.

You may be surprised with what you learn when comparing the two policies. Not all companies write this kind policy. I pretty sure Chubb does and our insurance is with Travellers.

We did have a major tornado-caused claim and Traveller's paid up to replace slate, plaster, floors, built-in woodwork, etc. with identical materials. They brought in a special adjuster with expertise in this type of claim and policy. We were very satisfied.


    Bookmark   March 4, 2011 at 4:46PM
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We also have a restoration policy with Middle Oaks. Ours is a1780 colonial, appraised value is a little over $300,000. Cost to replace would be $850,000. Asked SO if the place burned down how would you want it rebuilt? He said the same way it is now: post and beam, 2 foot wide by 16 feet long floorboards everywhere and in the paneling in the den. Insurance sent out an appraiser who photographed everything so if something happens it is all documented and can be rebuilt the same way. Yeah it costs an arm and a leg, but what else do you do.

    Bookmark   March 4, 2011 at 5:39PM
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I had much the same discussion with our insurance agent in January. The prime consideration was whether or not the sewer lines, piping, electrical, and water supply to the house had been renewed, whether the a/c and heating system was replaced in less than 15 years old, cannot remember the rest of it.

But they did upgrade our insurance to replacement cost, and we live in a hurricane rated area. Hurricane exclusions apply for that kind of loss. Our house is only 60+ years old, not a really OLD house.

    Bookmark   March 5, 2011 at 8:13PM
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Just out of curiosity, who here thinks that you can build an new old house?

I'm pretty skeptical. I know, you can find reclaimed wood and other materials, but the cost is going to be astronomical. Even then, it's still not a real old house, in my book.

The house I have now is old but not in a good way (it was never in its life a good house). I've had other houses that were genuine house poetry - but even for those, I didn't insure for more than the agent's estimated replacement value. If I'd had a total loss, I'd probably have rebuilt with modern materials - then sold it and gotten another nice old house. (We'll ignore the deplorable state of the housing market for the moment.)

Now, if you're insuring the house so you can afford to walk away and do the same thing over again with another old house - that's another matter. Maybe in my naivete I'm just misunderstanding what everybody is saying here. But I remain unconvinced that it's very often practical to rebuild an old house after major damage.

Other thoughts?

    Bookmark   March 6, 2011 at 10:02PM
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I'm in agreement with Davidr; I wouldn't rebuilt after major damage because it wouldn't be an old house no matter what the material. You can't built historic - if something truly catastrophic happens, it's time to bring in the bulldozers & move on. I used to have complete replacement value with Chubb but 7-8 years ago the premiums became so exhorbitant that I had to rethink my choices so I downgraded & switched to Travelers. I still have excellent coverage with a partial replacement upgrade but the premium is more in line with other homeowners.

    Bookmark   March 7, 2011 at 12:07AM
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"Just out of curiosity, who here thinks that you can build an new old house? "

Well, someone built it to begin with. It wasn't placed here on earth by the gods.

The structure and finishes could certainly be recreated. However, the local code enforcers would likely have something to say about that. There is no way they would let you put everything back exactly how it was. I can't even count the amount of stuff in my house that is "grandfathered in" and it is only 100 years old.

    Bookmark   March 7, 2011 at 8:55AM
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"Just out of curiosity, who here thinks that you can build an new old house? "

You do not have to use old materials, just old techniques in most cases.

Plaster instead of drywall, mud beds for tile floors and walls instead of cement board, etc.

You neither can use nor want lead plumbing (DWV or supply), but cast iron is still available (though not with poured lead & oakum joints).

Electrical wiring has moved a long way since K&T (and the lack of any electricity before that in many houses).

Hardwood floors are not going to be as tight a grain as very old stuff (especially if it was virgin timber) but there is no shortage of wood flooring, even in very large widths of you want to pay the cost.
Virgin reclaimed (from old buildings or bodies of water) is also available.

There is no reason to use full size dimension lumber (though it can be found if you want to look & pay).
Joist spans are likely smaller than in very old structures, so extra wood is likely to be needed (I have never considered the bouncy floors of an older structure a 'feature' worth preserving or repeating.

I do not think anyone wants to exactly recreate the old house, just the important parts of the surface finishes.

I have repaired 18th century townhouses in Alexandria, VA so that you cannot even tell without putting a hole in the wall to see the new framing and wiring.

    Bookmark   March 7, 2011 at 9:52AM
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I agree with Brickeyee. My in-laws live in a "new old house" that they built. It's gorgeous. No, it doesn't have much of a history to it, but it's still a better built and more beautiful place to live than most new homes.

    Bookmark   March 7, 2011 at 11:17AM
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Thanks for the information about different types of policies to insure for replacement with similar materials or restoration policies, liriodendren and rafor. Helpful. DH and I have been having the same interesting discussion the rest of you have started above, regarding "can you?", "would you?" and "how much of the old house?" would you rebuild in a similar manner. Ours is only 98 years old. So, we are considering what exactly we'd want to recreate in a new home, if we had a total loss, etc. Frankly, we're to the point in our lives that we probably wouldn't want to re-live the last 18 years restoring another old home (in the "autumn" of our lives)! You all make some excellent points which I'll share with DH tonight. The other thing I think I'll do is discuss this with a neighbor (who actually lives in a much grander victorian) up the street to see how she has insured her home. Getting lots of input and info is good. Thanks!

    Bookmark   March 7, 2011 at 1:42PM
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I think the necessity of old house replacement with like materials policies is not so important if you have a total loss.

Where it is crucial is in a situation like ours where tornado winds twisted off a huge tree (diameter four feet high -DBH- was about 60 inches), picked it up and jammed it down through the (slate)roof of the 1 1/2 story wing. It severed some timber framing pieces, completely destroyed large swaths of slates, roof members, attic flooring, ceiling plaster of first floor rooms, etc. But it also permitted major rain to enter the structure during the storm, damaging the first-floor flooring, trim and built-in cupboards.

(By very good luck, the room where most of the damage occurred was completely empty on the day of the storm, so we had no personal property claims. A fact which at first confused, then bemused, the adjusters. Perhaps their generosity in paying the damage claim on the structure reflected their relief that no claim for stuff was involved.)

In all it created more than 80K of damage to the building, but nowhere near enough to cause a total loss of the building. Under these circumstances if we had not had replacement cost with excess declared value due to materials we wouldn't have been able to afford to repair the building to its previous state.


    Bookmark   March 8, 2011 at 5:03AM
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"I think the necessity of old house replacement with like materials policies is not so important if you have a total loss. "

I want my plaster walls back.

The least I would tolerate is 2 coat plaster (gypsum lathe) instead of three over wood lathe.

    Bookmark   March 8, 2011 at 8:31AM
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**Well, someone built it to begin with. It wasn't placed here on earth by the gods.**

Speak for yourself, dude. My house was.

    Bookmark   March 8, 2011 at 10:21AM
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Thanks for sharing the story about your tornado damage, liriodendron. More food for thought... -Kim

    Bookmark   March 8, 2011 at 11:18AM
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My insurance is with Travelers but Chubb also insures high cost old homes. The insurance is not for a total loss but for a partial loss. If part of the house burns down you would like to melt it into the rest of the house. If the house is a total loss you would probably bulldoze and start new. My house is assessed at $900,000 but insured for $1.6 million. It could be extremely expensive to replace in-kind material. On the first floor alone I have 10 interior 1 3/4 inch solid mahogany doors, 30 six over six solid wood windows, 3 marble fireplaces with one going for $300+/sq ft for the raw material, 6" wood trim and on and on. I could never sell the house for what all the pieces are worth. Travelers sent out a specialist to find the correct insurance level for us.

With the terrible snow/storms this past Jan we had MAJOR water damage (still haven�t figured out the cause but probably ice dams). We had to gut a room. Travelers sent someone out who specializes in old/high price homes and we got a check within an hour. I did check out Chubb years ago but they were much more expensive. We own two other rental properties and insure through Travelers. Our insurance for our home is more but reasonably priced.

    Bookmark   March 10, 2011 at 4:35PM
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