Homeowners Insurance

My wife and I are in the process of buying a house. We have actually made an offer on a property, and are waiting on the bank and the Veteran’s Administration to take care of all of their paperwork.

While they are doing that, I need to find homeowners insurance. I currently have received three quotes: State Farm, Progressive, and Bank of America. The problem is, I would like get a guarenteed replacement policy, and none of those companies offer that.

Does anyone know of any company in the Phoenix area that offers that kind of policy?

Anyone have any really good (or really bad) experiences with any particular company?

Please feel free to share any advice, suggestions, or words of wisdom. This is my first house, so I really don’t know what I am doing.


At one time, USAA offered guaranteed replacement cost but you have to be a member of the military to qualify for their policies.

You may want to try calling an independent agent or two in your area to see if any of the insurance companies they represent offer the coverage.

Go find another Sate Farm agent. SF does offer guaranteed replacement coverage for homes (at least they do in California) I have this coverage on my policy.

I came in here to say something like this…
If you’re eligible for a VA loan, you’re eligible for USAA insurance. They’re awesome for all my financial needs. Credit Card has the lowest rate, they offered me the best interest rate on financing, best prices on auto and home insurance.

I will check with them.

The thing is, I am a reservist who has never been activated. For a lot of things, I don’t qualify as a vet. In fact, they just changed the rules for VA loans in 2006. Prior to that, I was not eligible. So I may not be eligible for something with the USAA. I’m still gonna check 'tho.

Thanks for letting me know about State Farm, rick. I will find another agent to ask.

Ditto for Nevada.

We have State Farm insurance for our homeowners policies on our primary home and our rental property (a town-home) and we have guaranteed replacement coverage policies.

I just asked my sister about her homeowner’s insurance. She lives in Phoenix. They are insured through Farmers Insurance, and they have replacement coverage.


I am not an insurance specialist, but in my experience -replacement coverage policies of some sort can be bought with nearly any homeowner’s policy in AZ. But as mentioned in your link, it’s an endorsement you have to pay extra for, and it usually comes with the customary long list of limitations and exclusions. It’s probably better to make sure you have adequate coverage on your property rather than say… taking out a $150k policy on a $220k house and hoping the replacement coverage will make up the difference. If you have ever read a homeowner’s policy, you’ll see that there are literally thousands of confusing terms, statements, and general gray areas that the insurance company will write in to limit their liabilities. I suspect that if you ever have to use on the guaranteed replacement coverage -you’ll have a helluva fight on your hands with the insurance company on most every detail.

I have this added coverage on my policy through Liberty Mutual. I haven’t ever had to use it, so I don’t know how good it is, but I have been relatively pleased with LM for the past few years I have been insured by them. I was insured through Allstate for a couple years without any issues, but they just became too expensive. I also had coverage through Progressive many years ago when they underwrote their own policies in AZ (now I think they go through an umbrella company) and again no problems. I get competitive quotes yearly. Farmer’s is sometimes competitive but usually not the cheapest. State Farm is always expensive. Liberty Mutual gives me increased coverages at a reasonable cost, with a dedicated agent in a local corporate office. Some people like the perceived personal attention of an independent agent, but in my experience they tend to cost a little more.

Thanks for your insight. My problem with the quotes I have is that the insurance company pay out is based on an estimate of of what it will cost to rebuild. These estimates bear a striking resemblance to wild ass guesses. The three quotes I have so far have rebuild estimates ranging from 148k to 185k. That is a huge difference. I don’t know what it will cost to rebuild at any point in time. I don’t know what changes in laws or economy will do. If there is a disaster and everyone is trying to rebuild at the same time, that could drive costs up. I don’t mind paying a premium for a valid estimate of replacement cost. I just don’t want to get screwed if their estimate turns out to be wrong.

State Farm seems to be the best, so far. They had the highest rebuild estimate, and the lowest premium. They also were the only ones that put the face value of the policy at the actual purchase price (192k). The person giving me the quote also took the time to really explain things to me. If I can’t get guaranteed replacement, then I will likely go with them. I just want to make sure that I have the best protection on my house.

Most of the policies mentioned that you can get payment to something like 120% of face value. That is cool, but what if it costs 130% to rebuild. I guess I am really looking for an “Oh Shit!” policy.

Your “Oh Shit” guaranteed replacement coverage policy is becoming very rare. Allstate wrote them in CO when I worked for them, but I think we were the only ones who did (mid-90’s). It’s obvious why- insurance companies are in business to make money, not to provide a public service. If they allow you to insure a property for $130K and it costs $210K to replace, it’s bad business for them. Good business is you paying a premium on an amount that is closest to accurate for both the current value of the structure & contents and the replacement cost.

IANLAIA (I am no longer an insurance agent)

First off it is not necessary to insure to purchase price. Rebuild costs don’t equal selling price. Think about it, your purchase price includes both the building and the lot (dirt) Dirt doesn’t burn. Right now my guaranteed rebuild policy is at about $300,000. My house is worth somewhere in the $400,000 range.
One of the things you are paying for when you deal with an agent like State Farm is their and their company’s expertise. If SF says that they can rebuild your house for $X it is a pretty good guess that it can be rebuilt for very close to that amount. They also adjust my policy each year for the changes they have tracked in rebuilding costs.
Also I think you will find that insurance policies are very easy to read. Starting about 30 years ago, companies started simplifying the language used to about the 9th-10th grade level.
Also realize that very few claims are for total losses. How often does a house burn totally to the ground where nothing is saved? In forest fires, sure, but in Phoenix? It is far more likely that you will suffer a way smaller than a total loss while insured.
Which brings us to EJsGirl’s comment. Insurance companies protect themselves against not collecting enough premium by a thing called the co-insurance clause. here is how it works. Lets say an insured figures the odds, and says my house costs $200,000 to rebuild, but the chance of a total loss is very remote, so I will just insure to $100,000 and I will save 50% on my premium. This needless to say is bad business for the insurance company. So the co-insurance clause says, ok sparky if you are going to assume 50% of the risk for a total loss, then you are going to assume 50% of all losses. Had a $5,000 theft? Here is your check for $2,500. :smack: <-insured
The co-insurance clause only comes into play if you are insured to less than 80% of the rebuild cost.
So my recommendation is pick a quality company, find an agent you like with that company and insure to your rebuild cost. If you are nervous, before the renewal, call the agent and discuss your coverage.

IAACurrent insurance agent.

Replacement cost estimates aren’t pulled out of the night air. They’re based on a number of variables such as the quality of the materials used to rebuild. For example, if your carpeting is damaged, you can replace it with cheap shag or with the finest wool Berber. The huge difference in cost between the cheapest and most expensive explains the range in estimated replacement value.

That said, when you buy insurance, you’re hedging against an uncertain future. The insurance companies know that. No one can predict the next natural disaster, nor can they predict changes in law or the economy. Insurance companies are acutely aware of changes in state and federal law, and they’re not oblivious to natural disasters. I get all sorts of memos on this stuff all the time, whether it has to do with the states where I do business or not.

My advice is this. Talk with human agents. Ask them to explain in detail where and how they get their replacement values. Settle on an amount you can live with; there is generally room for negotiation on this point. And if they can’t (or won’t) get you what you want, ask for a referral to an agent who can (or will).

In terms of not getting screwed on future costs, the best way to do that is to meet on an annual basis with your agent to review your coverage and make any necessary changes as the value of your house changes. I get the feeling that you’re approaching this as a “one-and-done” thing, and it’s not. Any insurance agent worth their salt will not have a problem with this.


Run to USAA as fast as you can (I highly recommend them)… I am a Reserve Soldier, and they are happy to insure me…

I had a very unusual experience with USAA when I bought my first home. They had a very detailed formula they used to calculate ‘rebuild cost’. I went around in circles with the damn agent on the phone trying to explain that my split level house was half on a crawl-space and half on a slab. And of course, since it was built in the 1960’s it had hardwoods and plaster walls. Brick and wood veneer, etc.

This woman punched in all the numbers and came up with an estimate that was THREE TIMES the purchase price! I could not convince this woman that you could rebuild that house for less than $300,000.

Anywho… needless to say I went with Farm Bureau.

Thanks for all the replies, everyone.

I wanted a guaranteed replacement policy on the recommendation of several people, my parents, my mother-in-law, Dave Ramsey, college Econ professor. Having spoken with now 4 companies (all-state this morning), it seems that most insurance companies have moved away from the guaranteed replacement, so I am most likely not going to be able to get one.

When I asked about what happens over time as costs rise, the State Farm rep said basically this. It makes me feel a little better about the quote.

You know, I think your right. I just don’t want to deal with this crap every year.

My wife said the same thing to me. We just moved here from Nashville back in April. Before Nashville I grew up in California. So I am used to things like tornadoes and earthquakes and fires. In Phoenix, it is far more likely that my house will just melt. :eek:

Again, thanks for all the replies. I feel better about getting a policy. Especially since what you guys are saying matches up a lot with what the State Farm and AllState reps said. It is probably not fair to the agents, the company I work for interacts with a lot of health insurance companies on behalf of hospitals. This makes me tend to trust ALL insurance companies about as far as I can throw Volvo.

I’m with State Farm here in North Carolina, and I happen to know because I recently had to verify for my mortgage company that I have guaranteed replacement up to 125% of my insured amount.

Honestly, an annual review doesn’t take very long, and it gives the insurance agent the opportunity to [del]make more money[/del] review your overall financial situation to make sure you’re able to meet your short- and long-term goals.