Home owner's insurance expensive for anyone?

[PunditLisa]

@edwardcoast

Yes, you can, because it has nothing to do with market value. It has to do with the cost of rebuilding the home, not what the entire building and land is worth, just to replace the building.

Not true. We moved last year, and both were similarly sized homes, on similarly sized lots,all-brick construction with a poured foundation. The distance between our 2 homes is about 5 miles. Same county, same school district. The one’s fmv was 63% of the 2nd one, yet using the same agent and underwriting company, I was paying $90/month for the former and am paying $150/month for the latter.

I also own a lake house, which is significantly smaller than either of my primary homes. And it’s a log cabin with block foundation, so much less expensive to build than either of my all-brick, poured foundation homes. Yet I pay $110/month for it.

Go figure.

@edwardcoast

Currently ours is $50.00 a month. Are there places in the US where these costs are really very much higher?

My point is that unless you include key factors, you’re not going to get good data. Me saying “I pay triple what you pay.” isn’t very instructive unless we are comparing apples to apples. How big is your home? What’s the average cost per square foot to build a similarly constructed home in your area? Do you insure expensive cars and jewelry? Do you have a pool? Are you near a fire department? Do you own a Rottweiler?

FTR, I pay $1775 per year to insure a 3300 sf home (not including the basement) in an area where it would cost me ~$200\sf to build new. We don’t own any really expensive jewlery, we don’t own luxury cars, we don’t live in tornado alley, or a hurricane zone, or in a flood plain. Our neighborhood is gated, so low crime, within 1 mile to the nearest fire department, and we don’t own a vicious dog.

On the other hand, we pay ~$1300 per year to insure a 1700 sf log cabin we just got done building for $130/sf, give or take. Nothing in the home that would be worth stealing except my husband’s prized mounted trout. It’s in a rural area so virtually no crime. The biggest negative factor is that it’s ~20 miles to the nearest (volunteer) fire dept and there are no fire hydrants. I guess the risk of drowning is also higher because it’s on a lake.

So, while I can tell you that it’s much more expensive per square foot to insure the lake house, I can’t say it’s “expensive” unless I can compare it with what others pay for a similar circumstance.

[amarone]

@PunditLisa

I also own a lake house, which is significantly smaller than either of my primary homes. And it’s a log cabin with block foundation, so much less expensive to build than either of my all-brick, poured foundation homes. Yet I pay $110/month for it.

Go figure.

One has to consider that home insurance also includes liability insurance. $500k of liability insurance is $500k of liability insurance, no matter whether on a house with a rebuild cost of $200k or $800k. So the insurance cost is not proportional to home rebuild cost, although the rebuild portion might be.

And that is probably the reason the lake house is more expensive (as you suggest elsewhere in your post). People do not fall down on your back lawn and drown. Googling supports insurance being more expensive for lake homes because of liability.

[amarone]

@Finagle

My home insurance has been reliably ticking up by $100/year – it was $700/year when I started with this company, and it’s now close to $2K/year. I only have done one comparison which didn’t save me much, but this thread is making me think I should do some shopping around. Of course, I am somewhat close to Boston which means that everything is more expensive than it would be elsewhere. But I suspect that the insurance company is relying on me being lazy, which is actually a pretty good bet.

Yes - it is wise to comparison shop every two to three years for this very reason. Ditto for auto insurance.

(Also, the last time I switched insurance, the mortgage company screwed up the premium payments which meant that I was unknowingly without insurance for several weeks. I was not pleased.)

I have never used the mortgage company to pay my insurance or property tax for this very reason. I want to be in control.

[jasg]

@edwardcoast

Wow, I didn’t consider they could cancel the policy for anything else other than non-payment and fraud. So she went without home owner’s coverage entirely for those three years? That’s pretty frightening because if they don’t want to take the risk, it would make me feel they highly suspect something bad is going to happen to the house and they don’t want to be responsible.

@slash2k

You can almost always get a “non-standard” policy if nobody will write a standard one. There’s usually an insurer of last resort who will take almost anybody. Premiums and deductibles are higher, exclusions are more numerous, and you may not be able to get all of the coverages you want, but you can get very basic coverage.

Yep, they went with a very limited and expensive policy. Interestingly, their mortgage for a new purchase was almost derailed by being turned down by all insurers. The mortgage broker found a policy for them very quickly - and it was cancelled a month after signing. Then they had to scramble to find a new high risk insurer.

The other important lesson learned was if you call to ask if something could be claimed against your insurance - be sure to make it clear that the inquiry - is just that, a theoretical and not something that might lead to a claim. Stress that strongly. Two non-claim questions counted against my sister being considered high risk.

They now say they will never make a claim for less than 10x the deductible (10,000).

[edwardcoast]

@PunditLisa

My point is that unless you include key factors, you’re not going to get good data.

I got great data. The range is up to $4K a year which is expensive compared to myself and others paying $600 a year or less. These key factors you mentioned are extremely minor and are unimportant to the question. We aren’t asking a question to offer underwriting for applicants, it is a good practical question and the answer from those kind of enough to provide them were very useful.

if you want to talk to an insurance professional and come up with a 50 question survey for people to fill out to generator a report would include tables of data and graphs, it might make a good published article.

[Bone]

@amarone

I have never used the mortgage company to pay my insurance or property tax for this very reason. I want to be in control.

Sometimes the lender will force this as a condition of issuing the note. Depends on your circumstances I imagine. Other times they will offer an incentive to do so - maybe lower the rate 25 basis points or so. Then you get to decide if that’s worth it.

[Ann_Hedonia]

@edwardcoast

I’ve heard people complain about home owner’s insurance costs, and I guess we have always lived in places where the cost wasn’t much. Currently ours is $50.00 a month. Are there places in the US where these costs are really very much higher?

I think my mother is paying almost $2000 a year for the insurance on her new house . This is mostly because our last house burned down in an accidental kitchen fire and our old insurance company - which declined to insure the new house - paid out about $400K in claims for that fire.

Apparently it will go down in a few year assuming she doesn’t file any new claims,

[Fotheringay-Phipps]

@lisiate

Raw dollar values can be a bit misleading. It’d probably be more revealing to express it as a percentage of your house’s value.

Here in New Zealand my annual premium for home and contents insurance is about 0.7% of my house’s valuation.

ETA: Which leads me to suspect that my insurance company calculates there’s about a 1 in 200 chance of my house getting destroyed next year (based on a 0.5% probability plus a profit margin).

This only applies to the cost of the “improvements” i.e. the structure. The insurance is not really covering the value of the land, which isn’t going anywhere.

[amarone]

@Bone

Sometimes the lender will force this as a condition of issuing the note. Depends on your circumstances I imagine. Other times they will offer an incentive to do so - maybe lower the rate 25 basis points or so. Then you get to decide if that’s worth it.

I’ve not come across an incentive. I might go for that. I think they are more likely to force escrow the larger (as a percentage) your mortgage. I’ve always (since coming to the US) made a chunky down payment.

[Mama_Zappa]

@edwardcoast

I’ve heard people complain about home owner’s insurance costs, and I guess we have always lived in places where the cost wasn’t much. Currently ours is $50.00 a month. Are there places in the US where these costs are really very much higher?

We have a house in Virginia, and a tiny condo (less than 1/10th the value) in Florida.

Our homeowners’ insurance here had cropped up to nearly 2K a year - it was rising much faster than inflation. The insurance company actually rejiggered that for us and it’s now about 1K a year.

The condo costs 600 a year to insure (plus another 200ish for flood insurance despite not being in a flood zone).

So, nearly as much, for 1/10th the value.