Well, one strategy is to change companies. No joke. My insurance agent just ran ours, and we'll be getting our house and our car insurance at a different company (same agent) for the cost of the car insurance only at the other company (eventhough we had discounts for home+auto). Apparently, one company puts me in their top bracket of preference, and the other doesn't. It appears I'll be saving about $700 a year (and with a little better coverage on the house and the cars).

I agree. Find a good home insurance broker (agents usually represent one company, a broker will search for the best rates from many companies). Last summer, I had my broker work various coverage options to get the best price for the coverage we wanted. I would not suggest cutting your coverage, especially if you can get the same coverage for less elsewhere through a quality company.

In our case, the insurance actually turned out the be much less expensive that expected. Then the company floored me a few weeks ago, by sending a letter to notify us that they had decided to lower their rates, and that they would be sending customers rebate checks. Rather than calling to find out the exact amount, I decided to just let the gift be a surprise.

Now I know the difference between an agent and a broker. :) I just call them my agent, but yes, the office and person I work with would be defined as a broker. They work with at least 4 different insurance companies (that I know of).

Agree with shopping around- we switched and dropped our homeowner's from $1100 to $400, and the auto was about that much cheaper, too.

Shop both agent's and brokers, some brokers have lousy markets so having several doesn't mean much. Some direct agents have the best company. Doesn't hurt to shop it around every other year. As said, get quotes on the different deductible and options. If you can afford the loss, get the higher deductible, I've never had a HO claim.

You asked, "My question is - couldn't I just insure it to the appraised value of the house AS IT IS."

That's called an actual value policy. Ask them if that is an option.

Some options

1) as mentioned above, ask about a "Stated Value" or "Actual Cash Value" policy. It would insure for an exact amount and no more.

2) See if you can insure the home only and exclude insurance on the contents. IF you are willing to take this risk. If you have a burglary or fire, you have furniture, persona items, electronics that aren't covered. But check the cost of insuring them and them consider the risk and decide if this is for you.

3) Changing contents coverage from "full replacement value" to "Actual Cash value". Actual cash value is the used price where full replacement is if you bought brand new.

Please realize that even if your contents are covered today, your policy likely has limits that reduce your coverage. Mine had a very low limit of TVs and computers...something like $1500 max for all TVs in the home. Unless you paid extra for your policy for additional TVs. I think it maxed on $1000 for all computers and computer related eqpt.

A cash value policy is usually for current value, not what you paid for the home. It will pay the mortgage holder first, not you. If you're upside down, you'll stay upside down and end up owing the bank the difference even with an insurance payout for the market value. If you only have negative or limited equity in a home, a cash value policy is NOT the way to go to protect your family.

A replacement policy will get you somewhere to live, even if you really don't want to live there anymore. You can always sell your reconstructed home when it's complete.

Now, there are "agreed value" policies, for homes that are difficult to value, but like any policy with a rider, you pay extra for that. In other words, you can insure a 100K home for 1M if you want, but that will cost you more than insuring it for replacement value.

Keep in mind that the actual cash value of the house may NOT be enough to rebuild even a smaller house.

Losses above a certain percentage of the house's value must usually be rebuilt according to modern building codes which can considerably add to the cost of rebuilding a damaged dwelling. Replacement in kind coverage usually covers these upgrades, but lower, stated value policies do not.

Also if you have a mortgage on the property, the lender may require insurance equal to the value of the note.

In some states choosing not full replacement value insurance significantly affects (downward) the amount of recovery if the building/contents are a total loss.

Make sure you understand what choices and the consequences of them.

Choosing to insure only to the appraised value ignores the substantial functional value that is inherrent in older houses. It ignores the value that exists as an occupiable dwelling that is separate from what you could get for it.

And even if your idea is to just move away, you should know that in some cases, especially fires, you can't just take the check. You may have to rebuild, or at least use the all proceeds to repair the structure. This is an anti-arson fraud rule. Otherwise unscrupulous people would just burn down insured, but unwanted, buildings and use the insurance money to "cash out."

We carry a very high deductuble policy, but with replacement in-kind coverage on our mid 19th c. house. When we had substantial damage from a tornado our company worked with us, and even brought in a specialist on older buildings to help work out what it would cost to repair the building. They kind of wistfully suggested we might prefer dry wall and asphalt shingles, but paid, without quibble, the full cost of plaster and slate.

L.

" In other words, you can insure a 100K home for 1M if you want, but that will cost you more than insuring it for replacement value."

Prohibited in some states.

It tends to increase arson rates.

Well, after ANOTHER year of a $100 increase to my homeowners insurance I asked the agent , "what's the business plan of these insurance co's? They just going to keep jacking it up a cool $100 a year until no one can afford it anymore?"

My dh's college roommate owns an insurance company and he told us one time that the reason the insurance company ups our rate each year is for their benefit, not necessarily ours. With a rate increase, they get to write a new policy, a new policy means a new commission. Keeping the rate the same means no commission.

You can insure your house for whatever you want. You can even decrease the coverage if you think you can build new for less than the insured amount. We have our house insured for the amount we would have to rebuild, not the rate the insurance agent wants. We do let them raise the rate every year, just not as high as they want. We know they have to eat too.

When you said $100 per year, I assume that's $100 more to your payment amount, not the insured amount? If insured amount, that's not bad.

"You can insure your house for whatever you want."

Only if you own it free and clear.

Mortgage companies have a say on coverage amounts.

Some states prohibit over-insurance (tends to lead to arson problems).

Market value has little to nothing to do with building cost, especially on anything more than a few years old.

Just watch out what basis is used to compute the amount of insurance.

Land is not 'damaged' by fire.

An old rule used to be 20% land, 80% structures.

in many places that is no longer even close.

Even my appraisal for taxes uses more tan 70% for the land.

Build-able lots inside the Washington, DC beltway in Virginia are VERY expensive.

The smaller one story houses in the general neighborhood around me are 'knockdowns' for new houses well over $1 million.

The structure values are down below $20,000, the lots are worth over $500,000.

I don't see anyone here concerned about the quality of the company. Some of the cheapo internet companies provide awful service, and even some of the name brand established firms are unreliable. Especially if you live in a storm/disaster prone area. Sometimes you get what you pay for. And I don't like to pay too much :)

That is one advantage of using a broker, in my opinion. When I have a problem, I deal with my broker/agent; not some 1-800 number...

We've had two horrible experiences with two captive agent companies though. If I'm going to get screwed when I have a claim regardless, I might as well not get screwed on the rates.

Go online. There are several online search sites that let you get quotes from insurance companies. For whatever reason, the quote I got from a major national insurance company in their out-of-state office was substantially lower. After I signed up, the actual agent I'm dealing with now is in our state. Oh, an dour then-current insurance tried to match the 30% lower new offer, but I was annoyed that they had increased year after year.

double post

This post was edited by nosoccermom on Mon, Jun 3, 13 at 10:50

Also make sure to walk through the details of your current policy. I did this recently and discovered that the insurance appraiser had listed (and they were charging us the rate for) a "high-end custom kitchen" when in reality we have a virtually empty room awaiting a kitchen when we can afford it.

I shaved off $800/yr walking through the policy item by item.