Dwelling Coverage Amount

[Brian Olson]

I Have been going out to bid on my homeowner's insurance policies and I have found a lot of variation in what companies recommend for the Dwelling portion of coverage.  Ranges have been 170 dollars sq. ft. to around 300 dollars  a sq. ft.  One agent I spoke with recommended 400 dollars a sq. ft. and cited recent large  fires where many policy holders were underinsured with the rising costs of materials/inflation.  

I do understand that the specific market the property is in and quality of the build of the home will effect this cost.

Looking for feedback on what others have chosen.

Thanks,

Brian Olso n

[Michael Norris]

This is a hot topic right now because of the exploding cost of repairs post covid and there probably isn't a profitable home/auto insurance company in the US at the moment. 

Very simply - if your house burnt down tomorrow how much would it cost to rebuild? You being in San Francisco I think $170 per squarefoot is ridiculously low unless you live in a kit house or log cabin. $300 per square foot may not even be enough at the moment.

New build semi custom homes in Ohio cost about $300 per square foot to build at Ohio prices - I can't guess what it is in Cali but I know it will be more.

The insurance marketplace is a dumpster fire and agents are trying to survive at the moment. A lot of Agents are chasing new business and many have given up "selling the value" of proper coverage and instead chase the least expensive policy they can pitch you. Many consumers don't pause (like you are doing) and ask how much coverage do I actually need they just want the cheapest coverage.

It's all fun and games until the claim happens. 

Agents all use similar software to come up with their reconstruction estimates - there are maybe 3 or 4 software programs for this. If I was you I would start by asking for a copy of that report and see what they input versus what is accurate for your house.

Do they have the correct square footage? Does the construction style, materials, age, etc all match with with you really have. Interior - how many rooms, bathrooms, types of finishes, etc do you have vs the reports.

Agents do not get a lot of education on how to calculate these estimates - some wing it, some work the angles to try and pitch you a lesser expensive policy and some actually know what they are doing and try to give you proper coverage without over doing it and blowing the sale. 

Unfortunately there are some who will outright misrepresent your home as being smaller and newer than it actually is to chase the lowest rate.

If/when a major claim happens and you don't have enough to rebuild your house it gets ugly fast and all parties point fingers at each other. 

Some would say the agent is responsible and I would agree to a point... but that whole policy application you sign when you buy the policy... that thing says the information is true to the best of YOUR knowledge and that you are ultimately responsible for what is on that paper.

That becomes even more locked in place against you once the policy renews a couple times. If you say the agent did it - The claims adjusters will look at the agent who wrote the policy to see if they can stick them with some of the claim obligation on the agent's E&O but that effort is more about improving the company profitability versus the justice of "right & wrong".

Whether they stick that back on the agent or not your claim will have been delayed by months going thru that process and it very likely would not go your way unless you can prove you told the agent X, Y, Z on the application is wrong and you can prove the agent said "don't worry about it".

At the end of the day the adjuster will look you in the eye and say if the application was not correct why didn't you say something?

On the other end of that conversation the agent is telling the adjuster "I dunno that's what they told me or the person who wrote that policy isn't with the agency anymore" etc etc etc. Either way the client never said anything about the application being incorrect - and you live there the agent doesn't.

Asking questions of the agents and looking at the RCV report will tell you most of what you need to know to make this decision.