question on home owner's insurance

**Seeker** · 02-08-2009, 11:51 PM

I have a condo, so I really only insure for Contents. The Association pays for other insurances and passes that cost onto us through "association fees".

Ultimately, since no one responded to your question, it may be a very company designed question.

My understanding (probably limited) is HO-1 is Basic and H0-5 is covering everything except earthquakes, flood and war. HO-1 should cover theft, fire, and some 8 or 9 other risks ... but then you can also get Disaster Insurance to help cover exclusions.

You need to read your policy. And understand the benefits and exclusions thouroughly.

You can also usually lower costs by raising deductables or doing things that reduces risks (such as installing a security system). But check with your company before making any changes.

You also need to clarify liability risks with the different types of insurance and understand when the coverage starts up if, say a neighbor trips and falls because of a garden hose on the sidewalk, etc.

Details are always important with insurances. Comparisons depend on consistencies and asking others is not relevant because their homes are different sizes and may be on land at risk for flooding or earthquake or whatever.

**GREENBACK** · 02-09-2009, 06:37 AM

Originally posted by Goldy1 View Post

So I was looking at my home owner's policy b/c it will need to be renewed in a couple months.
I understand the "dwelling" is the estimated cost to replace your home in the even that is needs to be rebuilt.
I have soemthing called h5 which was explained to me as being "premium" in the sense that if my house needs to be rebuilt I will be coveed for the x amount of dwelling PLUS an extra 20% of that amount in case it is needed to cover costs of increasing building costs.
I understand h3 is more "basic" and just covers the dwelling.

What do you guys chose? (I am in Michigan)
h5 is not much more for me at all since I get a good rate.

I recently did a review of my policy and was told something similar. I stayed with the slightly higher coverage because I could afford to pay a little more now versus coming up with a substantial amount in case of disaster. I'm not in a terribly disaster prone area but a lot can happen so I took the safe route.

**Goldy1** · 02-09-2009, 04:17 PM

I am covered for 200K home insurance for just under $400 a year ($2500 deductable which is highest allowed I was told). I have so many discounts ie tenure, good credit, multiple product discount. When I call AAA, they are shocked my insurance fee is so low. lol. It was $40 more per year to get the h5 coverage. I plan to keep that b/c $40 is not much to protect my biggest asset, my home.

**jIM_Ohio** · 02-09-2009, 05:24 PM

We changed homeowners insurance policies in November. You can save considerable money changing homeowners policies (who holds it) every 2-3 years.

Here is why (according to my agent):
House insurance is needed when you move into a house. The insurance company uses the sale price to base the value of the house on for the initial policy. 1 year later the insurance company has a formula it uses to calculate replacement values for the house and contents- usually inflating the value of the house by some inflation number, and also factoring in changes in prices of materials. My agent told me he rarely sees this number go down, and it can go up disproportionately relative to house.

So what my agent told me he is going to do is ask me to change who has the insurance policy every 2-3 years. We bundle our car and house insurance, which gives us another discount too.

So for two years we were with travelers, the house insurance went up something like $400 or $600 for the year, my agent switched it to hanover, lowering the overall bill by $600 or so (house insurance lowered $400 and car lowered $200). He was able to increase the liability on the car insurance and still save us $200 when he did it.

**momof1in150** · 02-10-2009, 02:18 AM

Jim - it is illegal to base home owner's insurance on the purchase price of the house. You cannot insure the land the house is on only the dwelling. Most of the time time they can get that information through the tax records but if not they take 70-80% of the purchase price as the value of the home.

Jumping around to different companies would never work in RI because so many companies won't insure you unless you have a prior policy with them.

It is wise to relook at your policies every couple of years because the price of materials change, you may have done changes to your home or the market may have changed.

USAA automatically gives us the extra 20% the OP was talking about. We also get a big discount on our car insurance because we have bundled our insurance with them.

**jIM_Ohio** · 02-10-2009, 02:43 AM

Originally posted by momof1in150 View Post

Jim - it is illegal to base home owner's insurance on the purchase price of the house. You cannot insure the land the house is on only the dwelling. Most of the time time they can get that information through the tax records but if not they take 70-80% of the purchase price as the value of the home.

Jumping around to different companies would never work in RI because so many companies won't insure you unless you have a prior policy with them.

It is wise to relook at your policies every couple of years because the price of materials change, you may have done changes to your home or the market may have changed.

USAA automatically gives us the extra 20% the OP was talking about. We also get a big discount on our car insurance because we have bundled our insurance with them.

Maybe this applies to new construction? Unless the insurance company appraises the house, how much would the insurer know what the house was worth (tax assessments are meaningless).

**momof1in150** · 02-10-2009, 02:45 AM

NO, it applies to all homes. As I said they can either get the information from the Tax Assessor or use their formula to calculate the replacement value.

question on home owner's insurance