Home Insurance Massive Rate Increase (Houston, Howe: HOA, homeowners insurance, countertops)

[marykate1]

Hi,

My home insurance is going up $500. I am with State Farm and I bundle my car + house. My house is paid off.

Here is my home insurance information. What can I do to bring my yearly rates down?

Dwelling
Limit
$340,900
Dwelling Extension up to
Limit
$34,090
Personal Property
Limit
$255,675
Loss of Use
Limit
$102,270
Coverage - Section II
Personal Liability (Each Occurrence)
Limit
$300,000
Damage to Property of Others
Limit
$1,000
Medical Payments to Others (Each Person)
Limit
$1,000
Deductible
Losses Other than Below
Percentage
2%
Amount
$6,818
Windstorm or Hail
Percentage
3%
Amount
$10,227

[gwarnecke]

Increase your deductibles.

[marykate1]

How do I find out how much to set the deductible?

Should I set the deductible based on what I am comfortable paying out of pocket?

[kreeyax]

Cheapest policy I've found this year is $3400 and last year my policy was $2300. I guess I'm getting to pay for all those new roofs my neighbors have been installing due to "hail damage". I'd consider myself fortunate if my policy only increased $500.

[escanlan]

Originally Posted by marykate1

How do I find out how much to set the deductible?

Should I set the deductible based on what I am comfortable paying out of pocket?

Yes on your paying out of pocket question.



Another thing to look at is the "Dwelling Limit" (replacement cost) value. Speak with your carrier/Agent to determine what they used to create that value. Carriers use "standard" amenity costs to create the replacement cost. For example if you have a very plain home without granite counters, this, that, etc., then they may be calculating the replacement cost based on the higher cost materials as their "standard". Something as simple as this can significantly change the replacement cost and of course increase your premiums.


Another problem with the calculated "rebuild cost" is it typically includes stripping the home to dirt and rebuilding from scratch. On a raised foundation (Pier & Beam style) that is a valid calculation. However on a slab foundation that is complete BS! There are so few "total Destruction" causes that damage a slab foundation to the point it can no longer be used. Trust me all insurance companies will try to get away with not stripping a foundation and starting from scratch! Most of those causes are not even covered in your policy anyhow. Even a typical house fire, fairly quickly handled by the local Fire Department, does not generate enough heat to damage the slab that it can not be re-used when the structure above it is destroyed beyond repairs. When building a new home the foundation part of the construction can easily be from 10% - 20% of the home's cost. You can easily see where that can significantly reduce the "rebuild cost" and hence the premium amount.


The Texas Department of Insurance (TDI) should do their job and get on the insurance companies about the foundation issue alone causing high premiums! There are no laws in place forcing insurance carriers to insure a home for a complete "strip to the ground and rebuild" cost. You can either demand with the carrier not to add that as a cost and hopefully find one that will agree to it.


Along that same approach is your choice to downsize the home and its amenities to a lesser cost. That is a personal choice you would need to look at. For example if you had all the high end amenities in your home can you live with a home that has the lower end amenities that could significantly reduce the rebuild cost? For example all of those granite countertops switched out with manufactured stone (fake granite) or even laminates and lesser cost flooring and trims. Or instead of 100% brick exterior can you significantly reduce that to siding (if your HOA or covenants allow it)? If you have a huge two story home can you design a livable one story in its place using the existing foundation footprint? Keep in mind that it would take a really catastrophic event to even get to that point and they are not common at all.


Another aspect to look at is if you own your home outright (no loan) or you have so little left on the loan since you will need to have insurance to at least cover the loan balance amount. This would come into play mostly on large properties (not these smaller development properties) or if the lot value in the development is extremely high. What is the land value as compared to the true "rebuild cost" of the home? Is it cheaper not to insure or just insure for the loan balance and if something so catastrophic happens you could sell it for land value and still afford to start over again elsewhere on a cheaper lot with a downgraded home?


Unfortunately today insurance is a game much like everything else. Each person has to figure out how to play the game based on their needs just to survive the totally BS insurance premium increase game!

[WRM20]

Originally Posted by escanlan

Yes on your paying out of pocket question.



Another thing to look at is the "Dwelling Limit" (replacement cost) value. Speak with your carrier/Agent to determine what they used to create that value. Carriers use "standard" amenity costs to create the replacement cost. For example if you have a very plain home without granite counters, this, that, etc., then they may be calculating the replacement cost based on the higher cost materials as their "standard". Something as simple as this can significantly change the replacement cost and of course increase your premiums.


Another problem with the calculated "rebuild cost" is it typically includes stripping the home to dirt and rebuilding from scratch. On a raised foundation (Pier & Beam style) that is a valid calculation. However on a slab foundation that is complete BS! There are so few "total Destruction" causes that damage a slab foundation to the point it can no longer be used. Trust me all insurance companies will try to get away with not stripping a foundation and starting from scratch! Most of those causes are not even covered in your policy anyhow. Even a typical house fire, fairly quickly handled by the local Fire Department, does not generate enough heat to damage the slab that it can not be re-used when the structure above it is destroyed beyond repairs. When building a new home the foundation part of the construction can easily be from 10% - 20% of the home's cost. You can easily see where that can significantly reduce the "rebuild cost" and hence the premium amount.


The Texas Department of Insurance (TDI) should do their job and get on the insurance companies about the foundation issue alone causing high premiums! There are no laws in place forcing insurance carriers to insure a home for a complete "strip to the ground and rebuild" cost. You can either demand with the carrier not to add that as a cost and hopefully find one that will agree to it.


Along that same approach is your choice to downsize the home and its amenities to a lesser cost. That is a personal choice you would need to look at. For example if you had all the high end amenities in your home can you live with a home that has the lower end amenities that could significantly reduce the rebuild cost? For example all of those granite countertops switched out with manufactured stone (fake granite) or even laminates and lesser cost flooring and trims. Or instead of 100% brick exterior can you significantly reduce that to siding (if your HOA or covenants allow it)? If you have a huge two story home can you design a livable one story in its place using the existing foundation footprint? Keep in mind that it would take a really catastrophic event to even get to that point and they are not common at all.


Another aspect to look at is if you own your home outright (no loan) or you have so little left on the loan since you will need to have insurance to at least cover the loan balance amount. This would come into play mostly on large properties (not these smaller development properties) or if the lot value in the development is extremely high. What is the land value as compared to the true "rebuild cost" of the home? Is it cheaper not to insure or just insure for the loan balance and if something so catastrophic happens you could sell it for land value and still afford to start over again elsewhere on a cheaper lot with a downgraded home?


Unfortunately today insurance is a game much like everything else. Each person has to figure out how to play the game based on their needs just to survive the totally BS insurance premium increase game!

The increase in premiums isn't bogus. Construction costs have gone up as have material costs. There's also cost increases driven by overzealous attorneys like Tony Buzbee suing insurance companies for roof damage.

It took us several years to get the replacement cost of our house remotely close to the actual cost. At one point, the insurance company standard cost for our house to be replaced was $80/sq ft, at a time when costs were running $150/sq ft in our area for construction on existing land.

If our house was to burn, our slab would have to be replaced. It's 70+ years old, has some minor cracks, and is too thin to support current construction methods.

Our house would likely sell for $550k or more. The house would be immediately demolished and replaced by a much larger house. That's what happens when you have a 1400 sq ft house on a 1/4 acre lot in Central Houston.

[gwarnecke]

Originally Posted by marykate1

Should I set the deductible based on what I am comfortable paying out of pocket?

Yes. Also consider what your likely next step would be if your house were completely destroyed (rebuild, sell the land and downsize, etc).

I maintain a high deductible and would likely only utilize my homeowners insurance if my house were very severely damaged. I use a portion of the annual cost savings to take steps to minimize my probability of loss (ie wifi-connected leak alarms in strategic locations, proactive trimming of mature trees near the house, etc), and keep enough cash on hand to take care of minor to moderate repairs/reconstruction without involving the insurance company.

[stephenMM]

This is the sort of thing that drove us to sell our house in Galveston, along w/ the property taxes that were always rising. We got out of the loop as soon as I turned 55. Then we bought a really nice 2 bedroom mobile home w/ 2 full baths and a walk in shower for $12,700 in a quiet Daytona Beach 55+ park. The insurance on it was inexpensive but didn't cover the carport or Florida room, both of which would have been the first things to go in a hurricane.

So we just socked the replacement money away in the bank and self insured it. Our lot rental was only $325 a month, and that included water, cable and lawn maintenance. The mobile home was great, almost no different than a stick built home. All of our monthly bills were around $600. You would not believe what they were in Galveston, especially the insurance!

At first we were concerned about hurricanes, but when we looked at the other 55+ parks, some of those homes looked like they had been around since Adam and Eve's time. I grew up on the Ms Gulf Coast, and some of those homes on the coast were reduced to nothing more than the foundation after Camille. Daytona and St Pete/Tampa have pretty much dodged the bullet on hurricanes going way, way back. But they have an unfortunate habit of heading toward Houston/Galveston after they get through w/ the coast.

[Htown2013]

Originally Posted by marykate1

Hi,

My home insurance is going up $500. I am with State Farm and I bundle my car + house. My house is paid off.

Here is my home insurance information. What can I do to bring my yearly rates down?

Dwelling
Limit
$340,900
Dwelling Extension up to
Limit
$34,090
Personal Property
Limit
$255,675
Loss of Use
Limit
$102,270
Coverage - Section II
Personal Liability (Each Occurrence)
Limit
$300,000
Damage to Property of Others
Limit
$1,000
Medical Payments to Others (Each Person)
Limit
$1,000
Deductible
Losses Other than Below
Percentage
2%
Amount
$6,818
Windstorm or Hail
Percentage
3%
Amount
$10,227

Consider yourself lucky. State Farm refuses to quote me a policy, saying they aren't quoting Homeowners Policies to Sugar Land, which sounds like BS.

I'd be thrilled with a $500 increases. Every year I get multi THOUSAND increase and spend DAYS/WEEKS fighting the increase. It shouldn't be so hard. This year has been by far the worst, and we're still not resolved.

[a_guerrajr]

Mine jumped up $950, shopped around and only found 1 that was slightly less but the deductibles were crap.